U.S. loan demand from small cap banks remains weak

While large companies have tapped the public markets for record-setting amounts of debt, smaller companies rarely have that option. However, data from the U.S. Federal Reserve highlights how loan demand by small cap companies remains weak. Sure, some of the recent weakness continues to be driven by the impact of Washington’s PPP lending program, but given that loan demand has been negative for 27 of the past 30 weeks, clearly there’s more to the story than the impact of the foregiveness of PPP loans. Small companies, especially service versus manufacturing companies, don’t want or don’t need any more debt.

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