Tight Credit Market May Impact Out of Home Bank Loans

You may pay more and see tougher covenants the next time you renew your out of home bank loan.  The April 2023 Federal Reserve Bank Senior Loan Officer Opinion Survey found that 50% of banks are tightening their commercial and industrial loan standards and that 60% of banks are raising commercial and industrial loan prices.  See charts below.

 

Billboard Insider’s take:  Billboard Insider expects bank lending standards and pricing to tighten even more in the coming months due to recession concerns and regulatory scrutiny of banks following the failure of Silicon Valley Bank and First Republic.   You should meet with your banker at least once a quarter to review your company’s prospects and financial performance.  If your banker understands your business they can advocate for you when a credit officer wants to tighten the screws.   And even if you have a healthy bank relationship it makes sense to keep at least one other lender informed on your business in case your bank gets into difficulties and tightens the screws on you or asks for your loan to be repaid to improve the bank’s liquidity.

 

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