Demand for business loans has strengthened in recent months, and banks were more willing to provide the financing, a signal that companies are poised to make investments in the second half of the year.
Almost a third of banks reported an increase in demand for commercial and industrial loans from small businesses and nearly 28% saw an uptick from larger and midsized firms, according to the Federal Reserve's July survey of senior loan officers, released Monday. Both measures improved from readings in the previous quarter's survey.
Stronger demand was attributed to businesses' desire to invest in plants, equipment or inventories.
The survey found banks were more willing to lend as well. Nearly 20% of respondents report that credit standards had eased at least somewhat for larger and midsized firms, though only 10% saw a loosening for small businesses over the past three months.
From a year earlier, credit conditions improved, the Fed survey found. Most banks that eased their business-lending policies cited increased competition for such loans. Several also saw a more favorable economic outlook.
Among households, demand for mortgage loans was similarly strengthening, but banks weren't moving as quickly to ease their standards, especially for weaker borrowers.
Almost 60% of banks reported stronger demand for mortgage among "prime," or low-risk, borrowers and 25% said demand increased among subprime borrowers.
Credit standards, however, changed little. Just 10% of banks said they eased standards on prime residential loans and none said they loosened standards on subprime mortgages.
The July survey is based on responses from 73 domestic banks and 22 U.S. branches of foreign banks.
Write to Eric Morath at eric.morath@dowjones.com
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(END) Dow Jones Newswires 08-05-131435ET Copyright (c) 2013 Dow Jones & Company, Inc.
