Are you interested in business lending? Do you need bank financing or alternative business loans? What’s new in the field? Read this article to get to know some recent findings in this regard.
Fed Survey on Bank Lending
In January 2018, the Federal Reserve introduced the results of its quarterly survey. The survey is based on the senior loan officers’ opinions concerning trends in bank lending practices.
What does the study show?
- Credit demand trended positively in late 2017. This was the first time in over a year. Loan officers anticipate the levels will be the same in 2018.
- For mid and larger companies, lending standards may become a bit looser. As for smaller companies, those standards are projected to stay relatively the same for them.
- Mid and larger companies may expect more affordable credit. As for smaller ones, terms are anticipated to be relatively the same for them.
For banks, small business borrowers are very often associated with higher risks as compared to middle-market or larger companies. By the way, according to the above-mentioned survey of bank lending practices, this bias isn’t going to disappear this year.
So, if you’re a merchant looking for business funding, such as alternative business loans, it’s vital to turn to a reputable lender. Consider applying to a reputable alternative online lender that works for both traditional and high risk businesses.
What Do Numbers Show?
Federal Reserve’s January 2018 Senior Loan Officer Opinion Survey on Bank Lending Practices is based on the responses from 71 domestic banks and 23 US branches and agencies of foreign banks.
When it comes to business loans, the participants in the January survey noted that, on balance, banks offered easier standards and terms on commercial and industrial (C&I) loans to large and middle-market firms. As for the demand for such loans, it remained basically unchanged.
What about big banks? They’ve discovered a new way to stay in the subprime lending business. Wall Street is still finding a way to provide financing for subprime loans. Instead of direct lending, big players in the field such as Wells Fargo and Citigroup, provide loans to nonbank institutions or shadow banks, which then deal with higher-risk clients.
According to banks, loans are safer as compared to direct subprime transactions. Direct lending to high-risk borrowers has decreased significantly over the years. In the 4th quarter of 2017, mortgages to borrowers who had credit scores of not more than 620 reached $20.4 billion, as Federal Reserve reports. At the peak of the crisis in the 1st quarter of 2007, the total amount made up $114.6 billion.
Author Bio: As an account executive, Michael Hollis has funded millions by using alternative funding solutions, such as alternative business loans. His experience and extensive knowledge of the industry has become a true asset for First American Merchant.