Business Lending Picks Up

The Federal Reserve Bank’s survey of lenders indicates that businesses might indeed be getting back to busines. Lending at 17 of 56 reporting banks rose in the fourth quarter or 2011, while lending slowed at just 6 banks.

The rise in funding was due to inventory restocking, covering accounts receivable, and mergers and acquisitions. For banks where lending fell, the chief reason was less need for capital investment.

Consumer spending fell in December and savings rose, indicating that even though consumer confidence is higher, spending is more carefully controlled. Banks also reported that standards for car loans and credit cards eased somewhat.

Of 55 responses, just 3 expect loan quality to medium- and large-sized firms to improve in the coming year, while 29 of 53 banks expect better quality small business applicationsd and 32 of 55 banks expect the quality of lending on commercial real estate to improve in 2012.

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