June 20, 2017 – Commercial & Industrial Loans (C&I), also known as business or commercial loans, are loans made to a business or corporation as opposed to an individual. They represent one of the key funding sources for many business sectors. C&I loans are often made to businesses to fund working capital or capital expenditures. This type of loan is usually short-term in nature and is almost always backed with some sort of collateral.
C&I loans increased just 2.0% year-over-year from last May and 1.8% from April. The trailing 12-month growth of these loans has steadily been slowing for the past year, with an average monthly drop of 0.7%. Post-crisis loan growth peaked at 13.6% in July 2012, well below the pre-crisis rate of 21.5% in 2008
Business loans are still up from last year and until that dips below 0% there is little reason to believe this could be predicting a recession. The most recent Fed survey of senior loan officers reported no change in lending standards for loans; however, in April of 2016 it reported banks started tightening their standards and terms in the first quarter which could be a contributing factor of the decreased growth.