Non-Bank Lending Market Research
Updated Jan 2022 for 4Q 2021
Key findings from our quarterly survey of top non-bank lenders in our network.
Non-Bank Lending Survey Overview
To better understand the non-bank lending market, Cerebro conducted a quarterly survey of non-bank lending activity for middle-market commercial and industrial (C&I) loans.
Complementing the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices, Cerebro hopes to shed light on the $1 trillion non-bank lending industry.
The survey is to get the perspectives of non-bank lenders, private credit lenders, and alternative lenders. Our most recent survey was conducted January 2022 and includes non-bank lending partners nationally.
#1 Key Finding
Lenders continued to ease lending standards, making it easier for businesses to get loans.
16% of of commercial banks and 26% of non-bank lenders surveyed continue to ease underwriting standards.
Top reasons for the willingness to loosen underwriting standards:
- Improved capital position (more than 80% of non-bank lenders and 22% of commercial banks).
- Increased competition (100% of non-bank lenders and 94% of commercial banks).
- Willingness to increase risk profile (100% of non-banks and 28% of commercial banks).
#2 Key Finding
Loan demand is up.
64% of non-bank lenders surveyed saw an increase for demand, compared to 32% of commercial banks.
Key drivers for increased demand for both non-bank lenders and commercial banks cited:
- Increased accounts receivable financing
- Increased inventory financing needs
- M&A activity
#3 Key Finding
Loan terms have continued to improve for borrowers.
- Larger loans: 27% of non-bank lenders and 23% of commercial banks indicated that they have made it easier for borrowers to get larger loans.
- Relaxed loan covenants: 15% of non-bank lenders and 13% of commercial banks indicated that loan covenants have gotten more relaxed.
- Spreads over cost of funds lowered: 26% of non-bank lenders and 42% of commercial banks have lowered spreads over cost of funds.
#4 Key Finding
Trend of easing lending standards may not continue.
Easing lending standards may not continue, as results were split on if non-bank lenders anticipate tightening or loosening of standards in the next 6-12 months.
- 27% of non-bank lenders anticipate over the next 6-12 months that lending standards will tighten. This is up from last quarter.
- On the other end, 25% of non-bank lenders expect lending standards to ease in the next 6 to 12 months, and 95% expect this to be because of increased tolerance for risk.
- 52% of non-bank lenders expect the economy to deteriorate, which will hurt their competitors more than them, which they then expect will help them win more business.