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implications of commercial lending trends on bank safety and soundness

According to Omega Performance’s 2012 Banking Trends Outlook Survey, banks have made specific goals to increase the amount of lending in the commercial arena. In fact, 77% of US banks stated they plan to increase their small business lending in 2012. The survey gave an overall feeling that bankers worldwide believe the economy will continue to improve through 2012.  This brings welcome news in contrast to the SBA’s Office of Advocacy reports of an almost 7% decrease in small business loans since 2010.

What this positive outlook also brings is a need for commercial loan review enhancements. With the possible Nearly 92% of survey respondents stated that their priorities will lie in adding and improving training.

A commercial loan review that is proactive in its approach to an entire portfolio as well as informative to its users can prevent issues from going unseen until it becomes too late. Banks will need to take the lessons learn from the past 5 years and adapt their actions based on maintaining satisfactory accounts. 

Many organizations are working to establish a more extensive review process for commercial loan reviews while others are choosing to outsource the work to specialist. Either way, the availability of third party resources as well as emerging software is helping to create a comprehensive approach to protecting bank safety and soundness.