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Business lending is picking up steam but are banks moving too fast? Some banks are increasing the amount of business loans being granted offering cheaper and more flexible terms. While this is generally a good sign, some are concerned that banks are relinquishing their tightening of credit too soon. The trend is being seen in banks of all sizes- for example, Wells Fargo, the 4th largest bank in the nation, is seeing outstanding loans increase by 12% in 2012. The State Bank of Southern Utah, a community lender, saw a 9% increase for 2012. Overall, commercial and industrial loans were up by 16% for 2012.
Wells Fargo says that the bulk of the increase it’s seeing in it’s commercial lending unit is coming from business owners who put off buying necessary equipment due to the recession, but now feel comfortable taking out a loan to make the investment in new equipment.
The chairman of Signature, Scott Shay, notes that he has seen a shift in the industry, saying “I do think some other banks are become more willing to make loans…” and added that they “are having a downward impact on prices.” The shift seems to be in the best interest of business-owners, large and small, as the article points out a few instances of banks practically fighting over who gets to make the loan to a business. Certainly good news for business owners!
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