By Jan Norman, small-business columnist, OC Register
June 19, 2012
Small-business demand for loans has started to pick up, and banks’ lending requirements for small businesses to get a loan have eased, according to a survey of senior loan officers by the Federal Reserve Board.
The Office of Advocacy within the U.S. Small Business Administration included this trending chart in its newest jobs and lending report:
The two trends are gradually reversing after a very difficult loan environment for small firms in 2008-09.
The Federal Reserve defines small businesses as those with annual sales of less than
Overall, the Federal Reserve Board notes, domestic banks have slightly eased their lending standards and have experienced stronger demand for commercial and industrial loans during the first quarter of 2012. There has also been a slight easing of standards for commercial real estate loans.
Many U.S. banks also reported lowering interest rates on loans and lines of credit to all sizes of business including small firms.
The primary reason almost all U.S. banks gave for easing standards and terms on commercial and industrial loans was “more-aggressive competition from other banks and nonbank lenders” rather than improved economic outlook.
Most bankers said increased loan demand was related to inventories, investments in plant or equipment, accounts receivable and mergers and acquisitions.
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