NEW YORK — This time last summer, banks were eager to issuecommercial loans without any pressing concerns on whether aborrower could manage the payments. However, banks are now muchpickier about who gets the loans, especially among newer andsmaller businesses, the New York Times reported today.
|The aftershocks of billion dollar losses on the consumermortgage side have spilled over into commercial lending at banks,according to the article. Commercial and industrial loans frombanks fell nearly 3% in 2007 from $3.36 trillion to $3.27 trillionamounting to the biggest yearly drop since the credit squeezestarted in 2001's recession, the publication reported. Still,credit extensions to businesses were growing at double-digit ratesearlier this year compared to an annualized decline of more than 6%by mid-June, the article read.
|Those businesses with strong credit histories and profits arestill prime candidates for loan approvals but longer wait times andhigher rates are likely to occur, according to the article.
|Meanwhile, some credit unions and CUSOs are also feeling thepains in commercial lending with some pulling back on loans andothers having to file suit to recover on defaults.
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