loans
Banks Ease Small Business Lending Standards
Thursday, August 19th, 2010 | consulting | No Comments
Banks have begun to loosen their credit standards for the first time since 2006, according to the latest survey by the Federal Reserve. The quarterly survey of senior loan officers indicated a slight easing of credit standards and most terms on commercial and industrial loans to firms of all sizes. This is the first survey since late 2006 to show an easing of standards on loans to small firms.
The survey respondents pointed to increased competition in various loan categories as a reason for the easing. Demand for such loans among firms of all sizes changed little last quarter after having dropped in the April reporting period. In contrast, credit card loan standards tightened slightly.
Locally, we are hearing that banks are increasingly flexible and more aggressive in working with their clients to create lending packages that are good fits. This is a welcome change from the last two to three years, when lenders were dealing with their own recession-related problems. While some banks are still wrestling with their loan portfolios, others appear to have worked through their issues. They now are devoting more resources to serving existing clients and attracting new ones.
This is good news for companies that need credit to keep their operations moving forward. For businesses that are in a position to take advantage of opportunities amid the carnage of the recession, many banks are more willing now to lend their support.