What Does Your Banker REALLY THINK?


We have written many blogs about banks, providing insights into their thought processes and approach to lending.

With that in mind, we thought it would be interesting to share information related to a quarterly survey conducted by Phoenix Management Services that may impact your business.

The survey, “Lending Climate in America” is administered quarterly to an array of regional and national lenders from various commercial banks, finance companies, and factors across the country.

The purpose of the survey is to gauge how they feel about the economy, lending practices and other related issues.



The survey highlights several interesting points regarding where they expect their lending activity will come from over the next several quarters.

  • For example, over 50% of the respondents believe new loans will be driven by merger and acquisition, organic growth and business expansion.
  • Only 13% believe growth will come from business looking to refinance loans at a lower interest rate.



Another interesting point relates to lenders’ optimism regarding the 2018 equity markets.

    > Over 60% of the respondents believe there will be modest single digit growth and

    > 12% believe there is room for double digit growth.

    > Virtually no lenders expect a decline in equity markets in 2018!

Lenders’ outlook on the US economy over the next six months improved over the past quarter.

Nearly 80% of the lenders surveyed believe the economy will perform at a B average, up nearly 10% points from last quarter.

On a longer-term basis, 53% of the lenders believe the economy will perform at a B average while 46% believe the economy will perform at a C average.  The combined group represents a 11% increase over last quarter.



Lenders’ outlook on interest rates changed significantly, as 89% (up from 50% last quarter) believe that rates will increase by ½ % or more. The overall sentiment for loan structures (covenants, advance rates, etc.) changed significantly. 

Of those surveyed:

  • 17% will tighten their loan structures up from 8% percent last quarter.
  • And finally, the number of lenders expecting their loan losses to increase rose to 39% from 25% last quarter, reflecting a significant increase in their perception of risk.



The survey reveals a certain dichotomy in lender sentiment.  It ranges from being bullish on the economy and growth of new loans, to pessimism related to increasing interest rates and loan losses.

One might ask, “How does one reconcile these different viewpoints and what impact do they have on my business?”.  

The truth is, it often seems that lenders want the best of both worlds.



They strive to take advantage of growth opportunities yet are still concerned with the risk associated with a highly competitive market.

This is especially true in this market, where lenders have a vast amount of lending capability that significantly outweighs demand.

Business owners must navigate this sentiment, particularly when they are looking to refinance or want to increase the size of their credit facilities.



Over the past couple of years, we have helped a number of companies refinance existing debt and have experience dealing with an array of different lenders.

Based on that experience, our advice is to choose your lender carefully.

Not every lender is right for every company. The market is very competitive; however, it is really important to understand if the prospective lender has the right loan structure, favorable advance rates and will stick with your company through thick and thin.

And if there is any question about how you should proceed, don’t be afraid to seek advice from a trusted advisor.


We specialize in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

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Over the years, through our many assignments, the Principals of Revitalization Partners frequently said to ourselves: “One day, we should write a book about our work and how we can help companies through our experiences.” This is that book and we hope that you find words of value to you and your business.

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