Access to capital remains a crucial factor for business growth and stability. As interest rates fluctuate, so does the lending landscape, impacting business owners' ability to secure the funds they need to thrive. In September, the Federal Reserve lowered interest rates by 50 basis points in the first cut in four years. At Bridge we surveyed our extensive network of lenders between September 23 and October 10 to understand how this rate change might influence lending activity. The results are encouraging for businesses seeking capital, suggesting a positive shift in lending trends.
The survey’s initial results reveal promising news: 75% of the lenders indicated plans to increase their lending to business owners over the next six months. This anticipated growth in lending activity is a strong signal for businesses, especially those looking to expand or stabilize their operations. With a substantial majority of lenders ready to enhance their loan offerings, business owners can feel reassured about their financing options. The confidence of lenders suggests that capital availability will likely remain robust, offering potential for business expansion despite broader economic uncertainties.
The survey also shed light on lenders' expectations for interest rates, with half of the respondents anticipating a decrease of more than 1% in the next six months. The remaining 50% foresee smaller decreases, indicating a consensus that rates will likely trend downward in the near future. This potential decline in interest rates could create even more favorable conditions for business owners seeking financing, as lower rates reduce the cost of borrowing and increase access to capital. For businesses planning to invest in growth, this outlook adds optimism to an already promising lending environment, making the months ahead an ideal time to explore new funding opportunities.
Interestingly, the survey results reveal that none of the lenders reported a decrease in their lending over the past six months. This commitment to lending reflects a strong level of confidence among lenders, despite recent economic fluctuations. For business owners, this consistency means that lenders are not only open to providing capital but are actively maintaining or even expanding their lending activity. Such stability is reassuring, as it suggests sustained availability of funds for businesses seeking to grow or weather economic challenges.
When asked about their expectations for spreads over the index rate following the recent rate decrease, 75% of lenders indicated that they plan to keep their spread unchanged. This response suggests that while the base rate may fluctuate, lenders are committed to maintaining consistent lending terms for borrowers. For business owners, a stable spread can add predictability to financing costs, even as underlying rates shift. This approach from lenders shows a dedication to providing reliable lending terms, which can be especially valuable for businesses looking to plan their financial strategies in a changing economic environment.
The final survey question provides a strong close to an already encouraging outlook: all of the lenders surveyed expressed an openness to forming new lending relationships. This universal willingness to engage with new borrowers is a clear signal of lenders’ confidence in the current market and their commitment to supporting business growth. For business owners, this opens the door to fresh financing opportunities and valuable partnerships with lenders eager to provide capital. As the economic landscape continues to evolve, businesses can be optimistic about finding the support they need to achieve their goals, knowing that lenders are ready and willing to work with them.