The main theme of this paper is to explore the difference as well as the complementary relation between hard-information and soft-information in small business lending. I would demonstrate that, in both cases of large- and small business lending, in order for loan officers to make appropriate judgment, they should depend upon two tiers of information. However, because of the scanty hard-information about creditworthiness of small businesses, loan officer would more heavily depend upon soft-information in small business lending compared with large business lending. Because of the uniqueness of soft-information, the infrastructure on which soft-information flows from borrowers to lenders greatly differs from one on which hard-information transfers from borrowers to lenders. Most soft-information about small business transfers through personal networks between loan officers and managements of borrowers. In this context, the personal networks constitute the most important infrastructure for the efficient flow of pertinent information. I would argue that, in order to increase the efficiency of small business lending markets in Japan, the government and regulatory authorities should enhance the infrastructure for the flow of soft-information and promote more efficient exploitation of this sort of business information by lenders. However, recent regulatory thrust into hard-information oriented lending polices manifested in the Financial Examination Manual is in awkward contradiction with the efficient exploitation of soft-information in small business lending. The improvement of the network through which borrowers provide business soft-information to lenders will be in line with enhanced the efficiency of small business lending markets.