Last month, we wrote about a CNN Money article that reported on weak loan demand near the end of June 2010. After the fact, analysts reported that commercial lending increased for the month.
According to a Business Insider article on banks beginning to lend again, Analysts reported that July continued the increasing trend of conventional commercial lending, extending the streak to two months in a row.
The latter portion of the CNN Money article reflected upon loan demand being weak, regardless of bank activity. This made sense as business owners continue to hold on to their cash reserves through the rough economic times. Taking out a loan is not as attractive as paying down current debt. Of course, this route takes a toll on some business spending, such as equipment renting, product development, sales, and marketing.
The Business Insider article makes a similar forecast about loan demand as of July 2010, extending the downward estimate for the remainder of the calendar year. Reduced consumer spending, which signals businesses to hold off on supply if the demand isn’t there, is one factor that is assumed to keep loan demand at a low level.
We’d like to observe how loosened bank loan regulation and the insertion of fresh capital from entities entering the commercial lending market, such as bond traders and other deep-pocket institutions wanting to capitalize on the commercial lending market, will affect the markets through the end of 2010.
As credit loosens up, the roles of conventional money come back into play. Down the food chain, hard money opportunities arise for customers who need the tool to make ends meet in order to qualify for conventional financing at a later point.
