Demand for Loans From Small Businesses Up: Survey

Loan demand from small businesses is at its highest level since 2005, according to a new Fed survey out today. Overall, banks classified loan demand as “somewhat stronger.”

While lack of lending is still seen as an impediment to small business growth, small businesses are pushing for funds. The Senior Loan Officer Opinion Survey on Bank Lending Practices noted that among domestic banks, 15 percent reported an increase in requests for loans from small firms.

Domestic banks also reported an increase in the number of inquiries from businesses for new or increased lines of credit.

The number of banks reporting stronger demand outnumbered those reporting weaker demand, which is in contrast to the Fed’s previous survey, three months ago.

Changes in customers’ needs relating to inventory, accounts receivable and mergers and aquistions were all cited as reasons banks saw a change in demand for loans. The survey also noted that banks that had weaker demand for loans from small businesses said their customers cited less need for capital investment.

About half of domestic banks that compete with European banks said they had an increase in business due to decreased competiton form European banks.

The survey also reported that demand for consumer loans remained largely unchanged, although a small number reported stronger demand for auto loans; in addition, some banks reported they had eased standards on credit card and other consumer loans.