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Lending standards, small firms

Lending standards, small firms is +5.1% net and has been rising over the last 3 months. That is in its normal range: higher than 58% of readings since 2007.

Latest (latest reading)

+5.1% net

As of

Q4 2026

3-month change

+3.30 % pts

1-year change

−3.20 % pts

20-year percentile

58th

20-year median

+1.9% net

Monthly averages, last 20 years. Shaded band = the middle half of readings.

What it is. Net share of banks making business loans harder to get. A higher reading means more credit stress in the Credit reading.

What it affects next

Lending standards, small firms is rising: +5.1% net (+3.30 % pts in 3 months, 58th percentile of the last 20 years). Here is what has tended to follow, based on links the data backs up.

→Corporate bond spread (Baa minus 10Y): has tended to rise in the same month. Not following yet
So far it is moving the other way (−19 bps over 3 months), which is worth watching. Link strength 0.64.
→Industrial production: has tended to fall about 6 months later. Watch
If history repeats, watch for it around May 2027. Link strength 0.57.
→Nasdaq Composite: has tended to fall in the same month. Following
It is: −13 % pts over 3 months. Link strength 0.54.

What is driving it

←Fed funds rate is high, which has historically lined up with this indicator rising about 15 months later.
Link strength 0.34. Higher rates usually come with stricter loan terms.

All tested links

Fed funds ratepressuresLending standards, small firmsData agrees
Higher rates usually come with stricter loan terms. Typical lag: 1-3 quarters. Strongest match 5 quarters later (correlation 0.34, 119 observations since 1996).
Lending standards, small firmspressuresBusiness applicationsData disagrees
Harder credit can slow new business formation. Typical lag: 1-4 quarters. The strongest pattern runs the other way: correlation 0.21 3 quarters later (73 observations since 2007).
Lending standards, small firmsmoves withCorporate bond spread (Baa minus 10Y)Data agrees
Banks and bond investors tend to pull back at the same time. Typical lag: 0-3 months. Strongest match in the same period (correlation 0.64, 124 observations since 1996).

Source: Federal Reserve survey via FRED (series DRTSCIS).