Banks keep tightening credit

Posted by: John Tozzi on February 03, 2009

Banks are still raising lending standards. The Fed released its quarterly survey of senior loan officers yesterday (summary here, report PDF here). 69 percent of banks surveyed reported tightening lending standards over the past three months for firms with less than $50 million in sales. (Other factors also tightened, like the amount of credit extended, loan spreads, covenants, and collateral needed.) Banks also reported somewhat weaker demand for commercial loans.

It’s worth noting that these surveys ask only about lending conditions over the previous three months. This one was conducted in the first two weeks of January, so it’s the first to measure a period fully after the financial crisis started in September. The Fed surveys have been showing tighter lending standards each quarter since the July 2007 survey.

In other financing news, The New York Times looks at where angels fear to tread. Maybe it’s time to read up on bootstrapping.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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