Businessweek Archives

Time Is Money


Frontier -- Trends

Time Is Money

Memo to entrepreneurs seeking a bank loan: Nail it down now. It's bad enough that the Federal Reserve has raised rates another half-point and is expected to raise them again. Now comes word that bankers are making it tougher to get a loan, period.

In its second-quarter survey of senior loan officers, the Fed found that 21% are tightening standards on loans to smaller companies. That's the highest number since the beginning of 1991, when a major credit crunch was taking shape. What's more, bankers say that they have finally stopped cutting their own profit margin, or "spread," on such loans, which has helped cushion the effect of previous Fed rate hikes.

Granted, those margins are near their all-time lows. And at 9.9%, interest rates on small loans as of April remain below their historical average of 10.2%. But that can't last for long. The bottom line? A return to double-digit rates is all but certain.


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus