Banks reported tightening standards on loans to companies and households in the first quarter amid mounting concerns over the impact of the coronavirus on the U.S. economy, a Federal Reserve survey showed.
Lenders tightened standards and terms on commercial and industrial loans to firms of all sizes, according to the “April Senior Loan Officer Opinion Survey on Bank Lending Practices,” released Monday. Banks also reported stronger demand for commercial and industrial loans, with most citing precautionary demand from borrowers for cash and a decrease in customers’ internally generated funds.
The changes “occurred late in March, as the economic outlook shifted when news emerged about the rapid global spread of Covid-19,” the Fed said.
In addition, banks tightened standards and reported weaker demand for all major commercial real-estate loan categories. They also tightened standards and reported weaker demand on credit cards, auto loans, and other consumer loans.
The survey was conducted between March 23 and April 3 and received responses from 67 domestic banks and 22 U.S. branches of foreign banks.
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