[Update 1: revises downward Moody's CMBS delinquencies] According to Capital Economics' U.S. Quarterly Outlook, business investment in Q210 rose 17%. However, Moody's Analytics reported last week that commercial mortgage-backed security delinquencies spiked since after Sept. 2008, passing 6.4% by March 2010. Moody's said small business are being forced to de-leverage because they cannot get adequate access to credit. Moody's cited the National Federation of Independent Business, a nonprofit research firm that partners with firms such as Bank of America and FedEx, which found a net 13% of small businesses found credit harder to get in July. The record high is 16%. The chart below, from JP Morgan's Securitized Products Weekly report, shows the decline in loans distributed to the commercial sector from Sept. 2008 to Aug. 2010. In Oct. 2008, small business loans exceeded large business commercial loans at just under $850 billion. Small business commercial investments now barely exceed $380 billion. Loans for larger businesses is now at $390 billion. Non-financial non-corporate businesses include not only small operators but also larger companies structured as limited liability entities, said Ben Garber, the author of the Moody's report. "These firms that rely on bank credit saw their total debt decline by a record 8.3% yearly in the first quarter to $3.5 trillion. With small businesses employing half of all workers, credit constrictions in this sector are a large factor in the sluggish hiring pace." Thomas Hoeing, president of the Federal Reserve Bank of Kansas City, said he expects commercial real estate to continue to be a drag on bank earnings for quarters to come, as HousingWire reported last week. The National Association of Realtors' Commercial Real Estate Index found 88% of respondents said commercial real estate development is virtually nonexistent in their markets. Garber anticipates this trend will only accelerate, especially in lieu of home price declines. "With both commercial and residential real estate potentially facing further price declines, a similarly rapid rate of credit expansion is not in the pipeline." Write to Christine Ricciardi.