Smaller…and less healthy companies find themselves with fewer options and more expensive and restrictive terms.
San Francisco, CA (PRWEB) October 30, 2012
Phoenix Management has released its “Lending Climate in America” survey, and based on a review by The Lending Circle, it confirms that lending in America is currently divided. The survey paints a picture of two different lending markets; one which caters to large healthy companies, and another which caters to small and struggling companies.
The “Lending Climate in America” survey, which is conducted on a quarterly basis by Phoenix Management Services, gauges the attitude of lenders towards the lending market and the economy in general. Lenders from banks and finance companies are surveyed to track the following topics:
- The Economy
- Expected Fed Rate Moves
- Growth Expectations
- “Most Desirable” Industries from a Lending Perspective
- “Least Desirable” Industries from a Lending Perspective
- Expected Future Loan Structure and Interest Rate Spread
- Lending Institution Competition
“It seems as the larger, healthier companies have lots of lending options and are getting very competitive terms, while smaller (EBITDA less than $10 million) and less healthy companies find themselves with fewer options and more expensive and restrictive terms,” said Michael Jacoby, Phoenix senior managing director and shareholder in the report.
The advisers at The Lending Circle, a division of Sunovis Financial, are not surprised either, as the company has seen this trend emerge over the past four years. In fact, The Lending Circle was formed, in part, to provide the smaller and less healthy companies with borrowing options beyond those offered by traditional banks and lending institutions.
Highlighting this shift towards larger and more healthy companies is the 20 percent (up from 9 percent last quarter) of respondents who indicated that collateral supersedes senior debt to EBITDA ratio when considering a loan request.
Concern about the overall economy was also shown to be on the rise. 66 percent of the respondents cited the budget deficit as having a potentially negative impact on the economy over the next 6 months (up from 49 percent in the Q2 survey). Additionally, volatile energy prices were put forward as the second most likely economic concern, with 39 percent (versus 30 percent in the Q2 survey) of respondents expressing concern.
Overall the survey revealed a continuation of the theme of stagnation in the economy and lending markets, a static interest rate environment, pessimism regarding economic growth in the U.S., and continuing weakness in commercial lending.
About The Lending Circle
Sunovis Financial and its division, The Lending Circle, offers expert lending services to small businesses and small banks, including SBA loans and other types of business loans. The company motto is to rebuild the American economy, one business and one loan at a time.