Fed survey: banks tighten lending to small firms and CRE

US banks tightened lending standards on commercial and industrial loans to small firms and on all categories of commercial real estate (CRE) loans over the third quarter of 2026, according to the Federal Reserve Board's October 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices, published on 2 November 2026 (Federal Reserve, October 2026 SLOOS).

The survey asked about changes in standards, terms and demand over the previous three months. Responses came from 61 domestic banks and 18 US branches and agencies of foreign banks, and were due by 5 October.

Business lending

• Commercial and industrial loans: standards basically unchanged for large and middle-market firms, tighter for small firms. Banks tightened premiums on riskier loans for firms of all sizes, and collateral requirements and interest rate floors for small firms.
• Reasons given: a less favourable or more uncertain economic outlook, and worsening problems in particular industries.
• Demand: weaker, on net, from firms of all sizes, which banks linked to lower customer investment in plant and equipment and to borrowers moving to other bank or nonbank lenders.
• Commercial real estate: standards tighter and demand weaker for construction and land development, nonfarm nonresidential and multifamily loans.

Household lending

• Mortgages: standards basically unchanged for most types, eased for jumbo loans and tightened for subprime loans. Demand was weaker across residential categories.
• Consumer loans: standards basically unchanged for credit cards, auto loans and other consumer loans, with tighter credit card limits and higher minimum credit scores for auto loans. Demand rose for credit card loans and fell for auto loans.

Special questions

Banks said they were more likely to approve credit card applications from super-prime and prime borrowers and less likely from subprime borrowers, a trend driven by small banks. They also reported tightening standards on all types of loans to nondepository financial institutions, such as private equity funds and credit intermediaries.

Context

The Federal Reserve held rates on 28 October: Fed decision. The labour market data for October: US payrolls rise 165,000 in October.