A net 19% of banks tightened lending standards for large and medium-sized firms in Q1 2025, the highest share since Q3 2023.
At the same time, a net 16% of banks tightened lending standards for small businesses, the highest share since Q1 2024.
Furthermore, the number of banks reporting weaker demand for large firms’ loans exceeded those reporting stronger demand by the highest margin since Q3 2024.
For small businesses, the difference was the largest since Q1 2024.
Decreasing credit demand will likely hinder future economic growth.
The lending space is pretty interesting right now, as private credit and regional banks have become more aggressive over the past year.
This is why, despite elevated risk, credit spreads have been declining.
Regionals, in particular, have been striving to get more exposure to…
— Reef Insights (@ReefInsights) May 14, 2025