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Business Loan Markets

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Credit availability for businesses continued to improve in 2005, according to the Federal Reserve’s Senior Loan Officer Survey. In the October 2005 survey (covering August, September, and October), respondent banks reported further easing of lending standards for commercial and industrial loans, although a slightly smaller fraction reported easing than in recent surveys. Respondents had narrowed their lending spreads, reduced collateral requirements, and increased the size of credit lines. This relaxation was partly due to stronger competition from other banks and other sources of business credit and partly due to credit terms that eased because of increased risk tolerance or a less uncertain economic outlook.

Suggested citation: “Business Loan Markets,” Federal Reserve Bank of Cleveland, Economic Trends, no. 06-02, pp. , 02.15.2006.

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