Are Banks Finally Getting Ready to Lend?

If you’ve been on the fence about seeking a small business loan, the results of the 2012 Banking Trends Outlook Survey by Omega Performance suggest now might be the time to stop dithering and start applying for the financing your business needs.

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The global survey of bankers has good news for both businesses and consumers seeking loans, but the outlook is especially optimistic for small business, with 74 percent of bankers worldwide reporting that their banks were planning to increase their small business lending in 2012. Bankers were also very optimistic about the economy’s growth prospects, both globally and in the U.S. in particular. Here’s a closer look at what the survey discovered and what it means to your small business.

Loan Standards to Ease

In the U.S., 19.8 percent of banks planned to ease their lending standards for consumer and commercial loans slightly, while 15.1 percent planned to tighten them slightly. The majority (59.9 percent) said standards would remain the same.

What It Means to Your Business: If you’ve tried and failed to get financing in the recent past, finding a different bank—one that is easing its loan requirements—could be the key to success this time around.

Commercial Lending to Rise

While commercial lending is projected to increase around the world, the outlook is especially positive in the U.S. Some 60.8 percent of U.S. banks surveyed said they plan to do more commercial lending in 2012, and 12.7 percent said they plan to do “considerably more.” About 19 percent plan to do the same amount of commercial lending. Just 7 percent reported plans to decrease or “considerably decrease” the amount of commercial lending.

What It Means to Your Business: Talk to your banker about his or her bank’s plans for commercial lending going forward. Watch the news for reports on banks increasing their commercial lending. Even banks that weren’t highly active in commercial lending might be getting in on the act, so keep your ears open for new entrants into the field.

Banks Will Pursue Small Business

Drilling down even further, small business lending in particular is projected to increase around the world, with the U.S. outlook again being particularly good. Among U.S. banks, 12.7 percent said their small business lending would increase drastically in 2012, and 63.7 percent said it would increase slowly. Some 18.9 percent said small business lending would stay the same, and just 4.7 percent said it would decrease.

In fact, when asked which areas of lending they would actively pursue in 2012, the leading answer was “small business.” More than 78 percent of banks reported they will pursue small business lending this year, far ahead of the 66 percent that will pursue lending to midsized and large businesses.

What It Means to Your Business: As more banks pursue small business lending, you could find yourself with more options, including new banks you may not have considered before. Use a variety of sources to keep in the loop as to which banks are most aggressive in pursuing small business loans.

Bankers Are Optimistic

Behind banks’ positive plans for increased lending is their belief that the economy is improving. Sixty-six percent of U.S. banks surveyed project the U.S. economy will “improve slowly” for the remainder of 2012; only 31.1 percent project it will remain flat. A mere 1.9 percent expects decline.

What It Means to Your Business: Just as banks’ tightening of credit at the beginning of the recession threw a chill over the economic landscape, their optimistic outlook now can help thaw everything from business plans to consumer spending. Make sure your business is prepared to take advantage of economic growth by developing a plan now to get the financing you need to serve customers, expand and thrive.

Lending Photo via Shutterstock


Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

10 Reactions
  1. With banks holding assets so tightly for the past few years I’m hopeful that 2012 will see some improvement. Thanks for the heads up and good luck to all those businesses applying this year.

  2. Let’s all remember that the big banks pulled the rug out from under small business in 2009 because it wasn’t convenient for them to work with us. Tens of thousands of small business owners were put under when large banks took away credit lines from small businesses without even notifying them.

    Now it must be convenient for them to use small business for their own benefit again. Let’s make sure we work with small, local banks who didn’t show their true colors in 2009. Stay away from the TARP banks.

  3. Thanks for the update, Rieva, wrote that, “74 percent of bankers worldwide reporting that their banks were planning to increase their small business lending in 2012.”

    I remember seeing that claim in the past. At least twice. (Maybe not that exact percentage)

    I hope that the banks start walking the walk.

    The Franchise King®

  4. I agree with Chuck and Joel. It’s been the same story for the last few years — tighter requirements and fewer loans. It depends on which study you look at — I see some say small business lending is down, some say it’s up (by a tiny bit) and some say small businesses are shying away from loans. Then there’s the definition of small business — it ranges from $1 million to $20+ million and few employees to 500 employees.

    What I’m seeing is that it’s best to go to smaller, community banks with lots of documentation: a business plan, how you will spend the loan, how you will repay the loan. These will give you a leg up.

  5. I’m a commercial lender working for a big bank in one of the worst-hit states in the nation and I can tell, our appetite for loans to small business is very strong! Don’t hesitate to reach out if you need some advice on securing the right loan.

  6. I agree with Chuch, Joel & Rob.
    This statement has been made before by the major banks. Hopefully this time small businesses will reap the rewards of increased lending. I also agree with Rob that smaller banks are the way to proceed with new applications. A strong business plan is key, along with all the other required paperwork. TARP banks are to be avoided.