In this year’s first quarter, banks have eased lending terms based on forecasts of improving US economy and companies seeking more loans as per survey conducted by Federal Reserve. The April survey has made it very clear that bank lending terms and standards have eased further in first quarter of this year.
Ben S. Bernanke, Federal Reserve Chairman, has pointed out that tight credit is one reason behind the ‘relatively slow recovery’. The Federal Open Market Committee keeps interest rate low for an extended period of time. A bond purchase program of $600 billion is also supposed to complete by June end.
Mark Vitner, senior economist for Wells Fargo Securities in Charlotte says, “Clearly, we are seeing a turn in the cycle.” It is found that commercial lending has improved as businesses have started to correct on balance sheets.
Improvements in credit quality of large and mid-sized loan applicants are reported after surveying and seeking opinions of 55 domestic bank officers and 22 US branches. Sign of improvements is also seen in recent months on some more categories of lending. Increase of commercial and industrial loan has happened at annual rate of 11.3 percent in March that is the largest since October 2008. This is in accordance to FED data released recently.
Commercial and industrial loans reached $1.25 trillion on April 13th. Demand for commercial loans increased for SMEs during last three years. Commercial real estate loans demand also surged for large banks.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to