Despite chatter surrounding the possibility of a “double dip” recession, lending conditions are beginning to show signs of improvement.
Based on the Federal Reserve Board’s latest bank lending survey, it appears lenders have begun to expand their lending to creditworthy businesses.
The survey results suggest that, on net, banks have eased standards and terms over the previous three months on loans in some categories.
For the first time since 2006, lenders are making it easier for companies with annual sales of less than $50 million (i.e. small businesses) to get “construction and industrial” loans. In a stark contrast to last year, lenders are opening (or at least cracking) their doors to small businesses seeking credit.
According to the survey, “around one-fifth of large domestic banks reported having eased lending standards for small firms.”
Big banks also claim to be taking more care to review loan applications, including letting borrowers appeal if they’re rejected.
As we noted in a previous post, it was only a matter of time before the economy reached a high enough degree of stability that banks begin lending to businesses once again. This, coupled with the federal reserve’s ‘super-easy’ monetary policy, is certainly an encouraging sign that we are returning to a normal lending environment. And a stable lending environment isn’t just great news for commercial real estate, it’s great news for everyone in business and a welcome step towards righting the economy.
