Financing

More Signs Credit Is Loosening for Small Businesses


A recent survey shows that risk managers have grown optimistic about small business lending in the near future

Photograph by Adrianna Williams/Getty Images

A recent survey shows that risk managers have grown optimistic about small business lending in the near future

Here comes a cheesy springtime metaphor: Loosen the spigot on small business lending, and who knows how many jobs and investments may bloom? That’s the optimistic takeaway of a new survey of bank risk managers, who forecast increased lending to small businesses in the next six months.

The survey (PDF), conducted for FICO (FICO) by the Professional Risk Managers’ International Association, polled 255 risk managers at U.S. banks, finding that more than 70 percent expect increased demand for small business loans over the next half-year period. It’s not just higher demand: Fifty-two percent said that the total credit extended to small businesses would rise, and 62 percent said there would be enough credit supply to meet demand. Seventy-nine percent said that the delinquency rate on small business loans would remain flat or decrease.

“In the past, the banking professionals we survey haven’t been as optimistic about credit for small businesses as they have been for other types of lending,” says Andrew Jennings, FICO’s chief analytics officer, in a press release. “The upbeat sentiment makes me think it’s possible that we’ll see small businesses picking up the pace of investing and hiring in the months ahead.”

It’s not the first sign that credit is loosening for small businesses. Last month, the Small Business Administration’s Office of Advocacy noted (PDF) that small business lending increased in the fourth quarter of 2012 for the first time in 10 quarters. Another survey, from lending middleman Biz2Credit, reported better approval rates for small businesses seeking loans at big banks, as a more stable economy gave lenders a rationale to grant more small business loans. Going back a bit farther, the Federal Reserve’s latest survey (PDF) of senior loan officers showed loan standards for small companies (defined as having less than $50 million in annual revenue) were stable, though respondents were more likely to indicate that standards were easing than tightening, and 32 percent said small companies’ cost of credit was dropping.

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

Race, Class, and the Future of Ferguson
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • FICO
    (Fair Isaac Corp)
    • $57.34 USD
    • 0.16
    • 0.28%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus