Banks Loosen White Collar a Bit

Posted by: Greg T. Spielberg on August 18

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Banks not quite giving away money, but survey shows they’re being less strict.

According to Chicago-based Northern Trust (NTRS), business credit is getting a bit easier to grab on to. A recent Senior Loans Officer Survey shows that underwriting standards for loans are loosening up under the collar. Commercial and industrial loans to large firms were easier to come by in July than in April and an about-face from 2008 Q4’s tight-lipped discussions. The net percentage of banks that were stringent about the terms of their loans decreased from 40% in April to 30% in July. In last year’s fourth quarter, it was 80%. The cost of borrowing also dropped. (An example of a stricter parameter is increased premiums on loans). Results are based on responses from 55 domestic banks and 23 U.S. branches and agencies from foreign banks according to the Federal Reserve Board. Banks say demand for loans is still weak but fewer banks tightened their standards on prime residential real estate loans by 55% from a year ago.

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BusinessWeek’s Joe Weber, Patricia O'Connell, Michelle Conlin, Frederik Balfour, Peter Coy, Greg Spielberg and Roger Crockett examine The Case for Optimism by looking past the financial turmoil and economic unrest gripping the globe to focus on the promising future that lies on the other side of this storm. We’ll chronicle the forward thinkers investing in R&D, launching promising new products, entering new markets, or implementing management and leadership.

See why BusinessWeek Editor-In-Chief Stephen J. Adler is optimistic about the economy amid the sharpest downturn since the Great Depression.

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