2008 Industry News
The Federal Reserve conducted a survey in April and reported that more banks are increasing their lending requirements for business loans, mortgages, and consumer loans.
Approximately 55% of the banks reported stricter lending standards, up 30% since January. In my opinion it is predictable that banks will continue to experience additional losses in the coming months. As a result of these losses on faulty loans banks will find it necessary to restrict their lending. For example, delinquency in the mortgage portfolio is a slow moving process .Mortgages are not really considered serious until they reach 90 days delinquency. Then every effort is made to restructure the existing rate and terms to provide relief to the borrower. However, this effort may prove futile in the long run and prolong the inevitably by months or even years.
Although the fed continues to provide billions of dollars into the banking system for low cost loans it is the individual banks loan policy that usually dictates loan availability. The need for an alternative source of loans is essential for the small business community and the economy.
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