Fed survey: banks tightened lending standards for small businesses and commercial real estate

The Federal Reserve said Monday that banks tightened standards on commercial and industrial loans to small firms in the third quarter, according to its October Senior Loan Officer Opinion Survey. Standards for large and middle-market firms were basically unchanged.

Banks also reported tightening standards, on net, for all three commercial real estate loan categories the survey asks about: construction and land development, nonfarm nonresidential and multifamily. The Fed said banks most often cited a less favorable or more uncertain economic outlook and worsening industry-specific problems as reasons for tighter standards.

Banks reported weaker demand, on net, for commercial and industrial loans from firms of all sizes, and weaker demand for all commercial real estate loan categories.

The survey covers changes in bank lending standards, terms and demand over the past three months. It is not an interest rate decision, and it does not show that all lending tightened. The Fed said standards on most household loans were basically unchanged.