With the country going through its worst financial crisis of the last 70 years, it's not so easy for small businesses to obtain bank loans.

But that doesn't mean banks have completely turned their backs on small businesses. It just means that owners of these businesses must work harder to get banks to open their lending spigots.

The Big Picture

Several elements of the credit crunch are limiting loans. First, banks already have so many troubled loans on their balance sheets that they are reluctant to make new ones that carry any risk, says Bob Seiwert, director of commercial lending for the American Bankers Association, or ABA.

"Second, there is a liquidity crisis. Banks need money to lend. If they can't sell the loans on their books, they can't get money to make loans to you and me," he says.

In addition, the economic slowdown has curbed the formation and growth of small businesses, crimping their demand for bank loans.

Banks also report that "the borrowers they see are less creditworthy than a year ago," says Eric Zarnikow, associate administrator for capital access at the Small Business Administration, or SBA.

The number of loans the SBA guarantees will probably drop to somewhere between 75,000 to 80,000 this year from 110,000 last year, he says. That represents a decline of up to 32 percent.

But not all banks are sitting on their hands. "We're expecting double-digit growth in our small business lending this year, which is quite a reversal of past years," says Kent Stone, who oversees much of small business lending for U.S. Bank.

The number and quality of loan applications from small businesses are rising at U.S. Bank, he says. Dwindling competition accounts for much of that.

"A number of our peers, especially in fast growing markets, such as the west, are having troubles. Other competitors continue to change strategy," turning away from small-business lending, Stone says.

"We're instilling a sense of normalcy despite times that are anything but that."

Improve your chances

1. Establish a strong bond with your bank before requesting a loan. "The most important thing you have with your bank is not money: it's the relationship you have with the bank," says Rich Sloan, co-founder of StartUpNation, a small business consulting firm in San Francisco.