The large banks have slightly eased up on lending rules for small businesses. This is the first time since 2006 that regulations have been eased. This move was prompted by competition from other banks and what are referred to in the industry as non-bank lenders. Small businesses are not responding to this move, primarily due to the slow economy showing few signs of coming back, further eroding the confidence that small businesses need to borrow funds. The trend towards loosening regulations has not affected the smaller banks who also lend money. Loan officers at some of the larger banks claim conditions are also improving for some consumer loans, but lending rules still remain much tougher than they were before the financial crisis. Consumer confidence remains low, as it has with small business.
This indicates that the US economy still has a long way to go. Even though some large banks are willing to lend money, borrowers in both the private and the small business sector and fearful of making the wrong move, as they remain unsure of what the future holds. This will not help growth and will continue to affect the job market as well as small businesses, who do the majority of the hiring in this country, are nervous about what the future holds.
Reddy, Sudeep and Robin Sidel. “Big Banks Loosen Lending Standards.” The Wall Street Journal. 17 Aug. 2010.
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