Small business lending still tight

From:  Medill Reports Chicago


Credit conditions may have loosened in the final months of 2010 for large banks and their customers, but for small banks and small businesses it is still rough going.

Of the small banks surveyed for the Federal Reserve’s fourth quarter report on bank lending practices, 96 percent said they had made no change in their lending standards, with a single bank saying standards have tightened somewhat. The report, released Monday, was based on responses from senior loan officers of 57 domestic banks and 22 U.S. branches of foreign banks.

This marks a slight shift from the third quarter’s survey released October 2010, which showed 88 percent of small banks with unchanged standards and 8 percent with eased standards.

“Standards for loans to small businesses are easing, but more slowly relative to large firms, as lending to large firms generally carry less risk," said Sean Incremona, economist at New York-based economic research company 4Cast Inc.