Fed Survey: Tougher Terms On Business Loans

By John S. McClenahen Increased economic uncertainty, greater caution about making loans to health-care and communications companies, and generally a reduced tolerance for risk are likely to make it more difficult for small, medium, and large businesses to get bank loans in the year ahead. More than half of U.S. banks recently surveyed by the Federal Reserve Board -- and two-thirds of foreign banks -- anticipate imposing higher loan-qualification standards and more restrictive terms. Indeed, during the last three months, two-thirds of domestic banks and three-fourths of foreign banks have charged increased premiums on higher-risk to large- and midsized firms.

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