This fall off in loan availability especially to small business owners is fairly recent and primarily due to the reverberations of the recent bank closures (bank runs) which resulted in the closure/ shot gun wedding / purchase by larger bank solutions that happened just last month.
It is a fact that loan initiations are getting clubbed like a baby seal right now mostly because banks say they're lending but actual loans getting closed isn't happening.
"Commercial bank lending dropped nearly $105 billion in the two weeks ended March 29, the most in Federal Reserve data back to 1973. The more than $45 billion decrease in the latest week was primarily due to a a drop in loans by small banks."
The picture inside of most companies has deteriorated in terms of the inventory they hold. This isn't an issue at many companies that don't rely as much on invetoried products but it's one of many metrics lenders look at to determine risk factors. Notice the spike in 2020,2021 which was directly due to stimulus (massive money printing) and also inflation which caused a lot of "panic buying" by merchants wanting to front-load inventory in order to beat percieved price increases.
These pump & dump convulsions have caught many businesses wrong footed afecting their cash flow and revenues.
Good grief:
“The percent of respondents who think general business condition will be "better" minus those who think it will be "worse" six months from now. Example: A net, negative 28 percent means 28 percent more small business owners think that general business conditions will be worse than those who think it will be better six months from now.”
So, the effect here I'm seeing is that Bank lenders are declining more business owners or simply stringing them along while hoping something changes for the better. Meanwhile, private lenders like myself are seeing more requests and from a much higher avereage credit quality borrower on average. Even so, the offers are lower in amounts than before and shorter in term even though the factor rates haven't really changed that much.
That is, Rates are stable to lower however the percentage of requests approved has fallen and the terms offered on the ones who are approved aren't as good as before.
Auto loans are sort of the "Canary in the Coal Mine" in the lending industry and, as I have pointed out before there are some pretty scary things going on there right now.
The fact is that our economy cannot withstand higher interest rates at 5% for an extended period, it just can't. The reason is that, years of Federal Reserve monetary policy which for over a decade manipulated market rates to near zero has created a crippling dependance on ever more stimulus to survive. Very much like an addict who requires ever more of whatever drug they are addicted to just to be "normal".
“In short, the Fed since Volcker has been pretty clueless and remains so. What has been more remarkable, though, is the persistent confidence shown toward all of these four Fed bosses despite the demonstrable ineptness in dealing with asset bubbles.”