Boston Herald article by Paul Restuccia

The credit crunch caused by the subprime mortgage crisis has led to a huge drop in the number of federal loans to small businesses.

Small Business Administration loans that provide working capital, known as 7(a) loans, have declined 30 percent in Massachusetts over the past year, nearly doubling the national drop of 18 percent.

“Some banks are tightening credit standards, and there’s a lot of nervousness about taking on new debt or even starting a small business,” said Robert Nelson, director of the SBA’s Bay State office.

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