Bank Lending in Today’s Capital Market

Many an organization has relied on banks, rather than the bond market, to supply capital for financing facility renovations or expansions. If you are considering a bank loan, you should know that the current banking situation reflects a new era. Pre-September 2008, money was cheap and easy to come by, with little due diligence, loose or minimal covenants, and insignificant ongoing monitoring requirements. Today’s world has changed dramatically and, according to a federal survey of banks, is not likely to improve until at least mid-2010. The survey reported that, 45% of the banks said they tightened lending standards over the last three months and expect standards to remain tighter through at least the second half of 2010.

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