April 23, 2024 — Roughly half of U.S. small businesses and midsize companies say their banks’ support at a time of elevated interest-rates and borrowing costs has improved their satisfaction and deepened their loyalty to their current providers. 

Fifty percent of small businesses and midsize companies participating in a recent Greenwich Market Pulse conducted in March 2024 said the credit policy of their banks had a positive impact on their levels of customer satisfaction and client loyalty. 

“Borrowing costs for companies have climbed steeply in step with the rise in the Fed Funds rate from almost zero in 2022 to close to 5% today,” says Chris McDonnell, Head of Community, Commercial and Digital Banking Analytics at Coalition Greenwich. “In these conditions, it’s remarkable that so many small businesses and midsize companies see their banks as having worked with them in a cooperative fashion on credit provision.”

Flexible and Response Credit Policies
According to data from Coalition Greenwich Commercial Loan Analytics, spreads on commercial and industrial loans increased by 5% in Q4 2023 alone. The widening spread, indicative of the premium banks charge companies for loans, compounded by the rise in base interest rates, dramatically increased the cost for bank loans. In addition, the January Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) found that banks had tightened lending standards for most loan categories in Q4 2023. 

However, new data from Coalition Greenwich suggest that a majority of small businesses and midsize companies are happy with how their banks have handled their credit policies in these challenging conditions. 

“Approximately 60% of companies in our latest Greenwich Market Pulse say their banks have been responsive in adapting their credit policies to reflect changes in the economic environment and market dynamics,” says Chris McDonnell.