Demand for Small Business Loans Highest Since 2005
The increased demand for loans suggests future expansion.
Domestic banks reported increased demand for small business loans over the last three months, bringing the demand to its highest level since 2005, according to an opinion survey of loan officers by the Federal Reserve Board.
That sounds like good news for the economy, say analysts. “If a firm wants to expand, they typically need to borrow money to do it,” Drew Matus, senior economist at UBS Securities reported to Bloomberg. “So at a minimum this suggests we should still be looking for decent job growth over the next three to sixth months.”
According to the survey, about 15 percent of domestic banks reported a demand increase for commercial and industrial (C&I) loans by small firms–defined as companies with less than $50 million in annual sales–even though banks reported little or no change in their lending standards for C&I loans.
And reports of stronger demand for small business loans outnumbered reports of a weaker demand, the survey found. That’s in contrast with the net weakening demand reported in the October 2011 survey of loan officers released by the Fed. –Abby Tracy
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