Survey Reveals Conflict in Biz Lending Forecasts
While credit unions and banks remain optimistic about their commercial lending activity this year, conflicting survey results hint that lenders may want to downgrade their forecasts.
In April, financial information company Sageworks surveyed 417 credit union and banking professionals who work closely with their institution’s lending portfolio, and found 67% said they would either be making more or significantly more commercial loans this year.
However, when Sageworks asked about small businesses’ general access to credit so far in 2014 compared to 2013, both credit unions and banks said their perception of the overall environment appeared less optimistic than the lending outlook.
Nearly half of the financial professionals surveyed said that businesses currently have the same access to credit as last year, and 3% thought that businesses had less access to credit. Thirty-seven percent said businesses have greater or significantly greater access to credit so far this year. (Click on the chart above to enlarge.)
“While nearly half of respondents think that the credit environment overall is unchanged for businesses, 67% of these same respondents are predicting more commercial lending activity at their specific institutions,” said Chuck Nwokocha, director of advisory services for Sageworks in Raleigh, N.C.
He noted, “These data suggest that there is a disconnect between the perception of the overall credit environment and the individual plans for lending at credit unions and banks.”
Recent data from Sageworks showed that privately held companies have been generating solid revenue growth and are showing signs of strong profitability, the firm said.
“The health of these companies may indicate an ability to take on debt,” said Tim McPeak, a director in the Sageworks’ financial institutions division. “There’s a possibility that banks and credit unions may be recognizing this slow but steady improvement on the income statements and balances sheets of privately held companies that are applying for loans.”