Business Loans Up, But Environment Not Great

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bank buildingSurvey results revealed by the Federal Reserve show some positive figures but a mixed backdrop. While small business commercial and industry (C&I) loans increased by 9.3% over the previous quarter, overall credit quality of applicants continued to decline as did loan demand. Approval rates also dipped at large and mid-sized banks down to 49% and 66% respectively.

However, the startling statistic comes from small banks which experienced an increase in approval rate up to 89%! (Hard to believe?)

Credit line usage also went up for the third quarter in a row, of which 89% of these lines carried a variable rate.

“On net, respondents indicated that all loan terms tightened,” the report concluded. “About 85 percent of respondents cited less favorable or more uncertain economic outlook as a somewhat important or very important reason for the tightening. Other commonly cited reasons were worsening of industry-specific problems and reduced tolerance for risk.”

Last modified: March 29, 2024

Category: Business Lending

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