Fed Survey Shows Easing of Standards, Terms on C&I Loans
The Federal Reserve’s latest opinion survey on bank lending practices revealed, on net, that large U.S. banks have eased standards and most terms on C&I loans and credit lines to borrowers of all sizes. The survey notes “more aggressive competition” as the primary reason for the shift.
In a July survey, conducted by the Federal Reserve Board on bank lending practices, lenders from 57 large U.S. banks — those with assets of $20 billion or more — indicated, on net, they had eased standards and most terms on C&I loans and credit lines to borrowers of all sizes over the previous three months. The Fed noted that the move continues a modest unwinding of the widespread tightening that occurred over the past few years.
The Fed said this is the first survey that showed an easing of standards on C&I loans to small firms since late 2006. Significant net fractions of domestic banks also reported having eased their pricing of C&I loans to firms of all sizes. Banks pointed to increased competition in the market for loans as an important factor behind the recent easing of terms and standards. Demand for C&I loans from large, middle-market and small firms was reportedly little changed, on net, over the survey period after declining over the three months prior to the April survey.