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Small Business Credit Scoring and Credit Availability*


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    The opinions expressed do not necessarily reflect those of the Federal Reserve Board, the Federal Reserve Bank of Atlanta, or their staffs. The authors thank William Jackson for encouraging us to write the paper and Cordell Wise and Marc Bernstein for their insightful background conversations. Elijah Brewer, Leora Klapper, Margaret Miller, and seminar participants at the 2005 Office Depot Small Business Research Forum and the 2005 Credit Scoring and Credit Control meetings provided helpful suggestions. The authors also thank Nate Miller, Mike Padhi, Aruna Srinivasan, Larry White, and Lynn Woosley for prior coauthored work on small business credit scoring without which this paper would not be possible.

W. Scott Frame, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309. E-mail:


U.S. commercial banks are increasingly using small business credit-scoring models to underwrite small business credits. The paper discusses this lending technology, evaluates the research findings on the effects of this technology on small business credit availability, and links these findings to a number of research and policy issues.