The only good news to be gleaned from the Federal Reserve’s recently released second quarter survey is that the news isn’t quite as bad as in the first quarter.
The “Senior Loan Officer Opinion Survey on Bank Lending Practices” provides a very helpful look at the availability of loans for businesses and consumers. This article provides information relevant to business borrowing now and in the future, and describes practices for the period of April, May and June 2009.
- 35.8% loan officers said their standards for commercial and industrial loans or credit lines for small firms (annual sales of less than $50 million) had tightened.
- 35.2% said the same about lending to firms with more than $50 million in annual sales.
- 25% said they tightened limits on credit lines for small firms.
- 60.3% said they raised the cost of credit lines for small firms.
- 64.1% said they increased the difference between what the bank pays for borrowed money, and what they charge for it.
- 58.5% said they tightened their standards for approving riskier loans.
- 35.8% tightened collateralization requirements.
- 46.3% said they tightened credit standards for commercial real estate loans.
- 42.8% said they decreased the limits on existing credit lines for commercial construction.
- 48.7% said they decreased the limits on existing credit lines for financial firms.
Forecasting
If your bank has tightened standards, when will your bank loosen standards for investment-grade firms’ commercial and industrial loans?
- 2.3% said by the end of 2009.
- 11.4% said in the first half of 2010.
- 36.4% said in the second half of 2010.
- 4.5% said in 2011.
- 20.5% said their standards would not be loosened in the foreseeable future.
If your bank has tightened standards, when will your bank loosen standards for commercial mortgages for investment-grade firms?
- 0% said by the end of 2009.
- 2.2% said in the first half of 2010.
- 22.2 said in the second half of 2010.
- 20% said in 2011.
- 40% said their standards would not be loosened in the foreseeable future.
If your bank has tightened standards, when do you expect to loosen them for below-investment grade commercial and industrial loans?
- 0% said by the end of 2009.
- 4.2% said in first half of 2010.
- 29.2% said in the second half of 2010.
- 31.3% said in 2011.
- 22.9% said they didn’t expect any changes in the foreseeable future.
If your bank has tightened standards on commercial mortgages, when do you expect standards to loosen?
- 0.0% said by the end of 2009.
- 0.0% said in first half of 2010.
- 10.2% said in the second half of 2010.
- 28.6% said in 2011.
- 53.1% said they wouldn’t be loosening standards for the approval of commercial loans anytime in the foreseeable future.