Non-Bank Lending Marketplace Survey

Non-Bank Lending Market Research

Updated Jan 2022 for 4Q 2021

Middle market C&I Loans

Key findings from our quarterly survey of top non-bank lenders in our network.

Non-Bank Lending Market Insights

Non-Bank Lending Survey Overview

To better understand the non-bank lending market, Cerebro conducts 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.

The most recent survey was conducted January 2022 and includes non-bank lending partners nationally.

Middle Market Lending Marketplace

#1 Key Finding

Lenders continued to ease lending standards, making it easier for businesses to get loans.

Non-Bank Lending Survey Infographic Reasons NBL Loosen Underwriting 4Q21

Highlights

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.

Non-Bank Lending Survey Infographic Loan Demand 4Q21

Highlights

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
Commercial banks and non-bank loan demand differed for borrowers seeking capital to supplement decreases in internally generated funds. More than 64% of non-bank lenders cited this as a key reason for demand, compared to less than 4% of commercial banks. This is likely due to the higher risk profile that non-bank lenders can underwrite.
 

#3 Key Finding

Loan terms have continued to improve for borrowers.

Non-Bank Lending Survey Infographic Bigger Loans Easier 4Q21

Highlights

  • 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.

Non-Bank Lending Survey Infographic Tighten Trend 4Q21

Highlights

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.

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  • Strategic insights for middle market CFO’s
  • Quarterly non-bank lending survey results
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