More promising developments in the area of borrowing.

An important just-released indicator of business health and activity reveals some upward trends--specifically, that companies increased their borrowing to invest in operations and more firms are keeping up with payments on loans they've taken out previously.

The SBA 's annual ranking of small-business lenders was just made available--and it reveals some interesting insights.

First, to clarify, the list isn't really a ranking. It includes all the lenders that made SBA-based loans in fiscal 2010, arranged alphabetically. But the information includes the number of loans each institutions made, along with the gross total amount of loans and the portion that was SBA-approved. So you can easily figure out which lenders are on top and which ones aren't.

In an article this week on Reuters, William Phelan, president and founder of PayNet, noted that small business loan default rates since 2006 were at about 6.9 percent—much lower than the 12.9 percent default rate that Moody’s Investors Service estimates for high-yield bonds.

Plus, data from PayNet—which provides small business credit history data and analytics for lenders—indicates that the small business default rate for loans will drop to 4.6 percent this year and will drop further next year—to 3.9 percent.

Small businesses just officially got bigger.

That's because the Small Business Administration recently revised the size standards defining whether a company is really considered small and, therefore, is eligible for SBA programs.  Generally, the new standards  have been revised upwards; they cover three industries--retail, accommodation and food service, and "other services" sectors.

We hear a lot from small businesses about how hard it is to get a loan and a lot from bankers that demand from credit-worthy borrowers is down. Now a new study provides  insights into the situation, by exploring the top reasons why banks are turning down applicants, along with plenty of other data. And because it includes asset-based lenders and other funding sources, it offers a wider view of just what's going on in the financing landscape.

The study , from researchers at Pepperdine University, surveyed 1,430 borrowers, lenders and investors, looking at changes over the past six months.  Since the most detailed analysis focused on banks and asset-based lenders, here's a look at the most salient points:

Bank of America is trying to boost puny loans to small business.

The banking giant, which is very active in the small business community, said it will provide $10 million in grants to nonprofit lenders, such as Community Development Financial Institutions (CDFIs), to leverage funds from the Small Business Administration (SBA) and the US Department of Agriculture (USDA) for lending to small and rural businesses.

The recent financial crisis has taught companies innumerable lessons, and one of the biggest is their reliance on banking partners—not just for funding but also for providing critical data needed to understand a company’s own liquidity and risk picture. As such, companies will become ever-more selective about their banking partners, and will expect more from those partners.

Even though sources of funding are unchanged, banks will be asked to be more proactive and entrepreneurial in their approach to service large corporate clients, according to a report from consultancy Celent.

In the latest move by a big bank to make itself into a friend to small business, Chase recently announced a program to offer incentives to small companies for hiring.  But the actual benefit to most small businesses is hard to see.

Specifically, the bank will lower its interest rate on new lines of credit by .5 percentage points for each new hire, up to three employees, for the life of the loan. The offer is available to business owners who are approved for a line of credit of up to $250,000 or existing business customers who increase their line of credit by at least $10,000.  And if you open a business checking account, you get an additional half percent discount on your loan rate. 

Small and medium-sized banks will suffer through another year or so of pressure related to commercial real estate. Even as prices slowly approach a bottom, prompting investors to gear up to grab distressed assets and revive the industry, it will take some time before banks see any benefits.

The implications are largest for community banks, whose concentrated exposure to this segment is pushing up their nonperforming loan ratios and pushing down their regulatory risk-adjusted capital, according to a report published by Standard & Poor's Tuesday.

A panel sponsored by the Securities Industry and Financial Markets Association on Monday on what banks can expect from financial reform warned that higher capital reserves and other limits Congress imposes on their profitability would hurt the economy as they curbed their ability to lend.

Several panelists, including Adam Gilbert, head of regulatory policy in the corporate risk management group of JP Morgan Chase, and Gary Mandelblatt, chief risk officer of Nomura, warned repeatedly of such "unintended consequences" from financial reform.