Main Street Monday: Fed Says Small Business Loan Demand Improves to +3.6% Net From -27.9% a Year Ago
October 12, 2026
Bob Coleman
Founder & Publisher
Main Street Monday: Fed Says Small Business Loan Demand Improves to +3.6% Net From -27.9% a Year Ago
The net share of banks reporting stronger small-business commercial and industrial loan demand rose to +3.6% in the Federal Reserve’s July 2026 Senior Loan Officer Opinion Survey, up from -27.9% a year earlier.
That is a 31.5 percentage-point swing in one year.
The Federal Reserve defines small firms as businesses with annual sales of less than $50 million. The demand measure is the percentage of banks reporting stronger demand minus the percentage reporting weaker demand. Fifty-five domestic banks answered the small-business demand question.
In the July survey, 9.1% of banks reported moderately stronger small-business C&I loan demand, while 5.5% reported moderately weaker demand. Another 85.5% said demand was about the same. No bank reported substantially stronger or substantially weaker demand.
The Federal Reserve classified overall demand from small firms as basically unchanged. A year earlier, however, only 6.6% of banks reported stronger demand while 34.4% reported weaker demand.
The improvement was concentrated at large banks. 14.3% of large banks reported stronger small-business loan demand and none reported weaker demand, producing a net reading of +14.3%. A year earlier, the large-bank net reading was -25.0%, a 39.3 percentage-point change.
Other banks remained slightly negative. Among those banks, 5.9% reported stronger demand and 8.8% reported weaker demand, producing a net -2.9%. A year earlier, the net reading was approximately -29.2%.
Lending standards changed little as demand improved. 5.5% of banks tightened standards for small-business C&I loans, 3.6% eased them and 90.9% reported no change. Separately, 14.5% narrowed loan-rate spreads over their cost of funds.
Small-business C&I loan demand moved from -27.9% net a year ago to +3.6% in the July survey. At large banks, the change was larger, moving from -25.0% to +14.3%.