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Banks' Business Lending Spigot Continues to Drip

NEW YORK -- This time last summer, banks were eager to issue commercial loans without any pressing concerns on whether a borrower could manage the payments. However, banks are now much pickier about who gets the loans, especially among newer and smaller businesses, the New York Times reported today.

By Michelle A. Samaad | Updated on July 28, 2008

NEW YORK — This time last summer, banks were eager to issue commercial loans without any pressing concerns on whether a borrower could manage the payments. However, banks are now much pickier about who gets the loans, especially among newer and smaller businesses, the New York Times reported today.

The aftershocks of billion dollar losses on the consumer mortgage side have spilled over into commercial lending at banks, according to the article. Commercial and industrial loans from banks fell nearly 3% in 2007 from $3.36 trillion to $3.27 trillion amounting to the biggest yearly drop since the credit squeeze started in 2001′s recession, the publication reported. Still, credit extensions to businesses were growing at double-digit rates earlier this year compared to an annualized decline of more than 6% by mid-June, the article read.

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