July 7, 2021
“Balances on outstanding and new small business commercial and industrial (C&I) loans increased in the first quarter of 2021, due primarily to a second round of lending through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) that began in January,” reads a report from The Federal Reserve Bank of Kansas City.
Here are key statistics from the report:
•Small business C&I loan balances increased 62.5% from the first quarter of 2020 to the first quarter of 2021 and increased 6.1% from the fourth quarter of 2020 to the first quarter of 2021.
•The percentage of outstanding small business C&I loan balances secured by SBA guarantees increased to 45% in the first quarter of 2021 from 40% in the fourth quarter of 2020.
•New small business C&I loan balances increased 444.1% in the first quarter of 2021 from the previous quarter. Compared to Q1 in 2020, new small business C&I lending increased 392.4% in Q1 of 2021.
•There was a 622.7% increase in new small business C&I term loans in Q1 of 2021 compared to the previous quarter. There was a 616.5% increase in new small business C&I term loans year-over-year.
•Fixed rate small business C&I line of credit usage decreased 2.5% from Q4 in 2020 to Q1 in 2021. Total small business C&I credit line usage decreased 1.4% quarter-to-quarter.
•Interest rates for new fixed rate term loans decreased 343 points, and variable rate term loans saw a minor decrease.
•The average interest rates on variable and fixed rate new and outstanding small business C&I term loans and lines of credit ranged from 1.4-7.24%.
•New small business C&I loans with interest rate floors decreased 3.2% in the first quarter.
•There was a net increase in loan demand and a net decrease in credit line usage for small, midsized, and large banks in the first quarter.
•In the first quarter of 2021, application approval rates increased 7% for midsized banks and 5% for large banks.
•Less midsize and large banks are reporting a decrease in the credit quality of applicants while small banks are reporting a 3% increase in the credit quality of applicants.
•Of banks that indicated a change in credit standards, a net of 11% report tightening their credit standards. On net, they also indicated all loan terms tightened.