NEEDHAM, Mass. — Commercial and small business lending balances increased in 2007 despite the subprime mortgage collapse and a spiral down of consumer lending, according to new data from TowerGroup.
Commercial loan outstandings rose 9.4% for the first nine months of 2007. Loan growth accelerated in 2007, with the largest increase coming in the third quarter at 3.8%, said Patricia Hines, senior analyst, wholesale banking at TowerGroup and author of the research, From Crunch to Squeeze: Global Impact of the Credit Crisis on Commercial and Small Business Lending.
Commercial and industrial loans continued double-digit growth and had the largest increase, with outstandings up more than 15%, TowerGroup found. commercial real estate and construction loans took a beating in 2007 declining more than 60% in the first nine months of last year.
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Although past due loans and loans in nonaccrual status for commercial lending categories increased 40% for the first nine months of 2007, levels are still near 20-year record lows, according to TowerGroup.
TowerGroup said it expects to see continued growth in 2008 for business lending, driven by emerging economies and by lenders targeting small and medium enterprises or middle-market firms.
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