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Here’s The Scoup On The Credit Outlook

February 3, 2011
  • Large and small businesses will find it easier to obtain credit this year. But pre-recession lending levels are at least two years off…lenders and borrowers need time to adjust to new regs and risk levels, plus lower spending.
  • Look for banks to increase commercial and industrial loans by 4% this year as business spending perks up, fueling economic growth. The loans will pave he way for firms to expand their operations and add jobs, boosting consumer spending.
  • Credit unions and other non-bank lenders will also make more loans, though lenders will focus more on a firm’s cash flow and less on collateral value.
  • Aiding the credit thaw: far fewer delinquencies, across all loan catagories…a 20% drop in past-dues as lenders wrote off losses on non-performing loans made before and during the Great Recession. With more business clamoring for increased lending…banks will respond.
  • Credit card standards are loosening. Great news for small business as more than 80% of them use plastic for short-term financing their operations.
  • A different story for commercial and residential real estate loans, however. Though larger banks are seeing more demand for commercial real estate loans, stubbornly low values will remain a big concern throughout much of the year. Home equity loans will remain tough to obtain as well. Many small business owners have used these loans as a way to find cash to keep their firms afloat in tough times or as a source of low-interest capital for improving their facilities or products.

It is no surprise that the outlook is positive. The activities of the financial world have always been compared to a roller coaster. Since June of 2010 we have begun to creep back up that long track upward. Our hope at GAI (www.gunwel.com) is that we (the consumers), as a whole, are more cautious and less greedy as we work our way through the course. Let Gunwel Tax & Bookkeeping be your financial compass. Give us a call at 212-979-6830 or stop by for a visit and we’ll see how your roller coaster ride is going.

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