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Phoenix’s “Lending Climate in America” Survey: Lenders Reveal Slow Growth and Choppy Recovery After COVID-19

December 18, 2020  |  By Jessica Zwirzina  |  2 Minute Read


For almost 25 years, Phoenix Management Services has been collecting, tabulating, and analyzing the results from its “Lending Climate in America” survey to evaluate national lending attitudes and trends. Each quarter Phoenix’s proprietary “Lending Climate in America” survey is distributed to over 5,000 lenders nationwide. The survey poses routine questions to lenders quarterly as well as three new questions to lenders to obtain feedback on current economic hardships.

The three new questions posed to lenders in Q4/20 focused on the COVID-19 pandemic and the opinions from lenders on various topics including including recovery coming out of the COVID-19 crisis, a potential second round of coronavirus-related government stimulus, and factors that will pose the greatest risk to their institution over the next six months.

Lenders were asked the following questions:

  1. Which of the following do you most agree with regarding a potential second round of coronavirus-related government stimulus?

    Lenders were surveyed to identify their opinion on the effects of a potential second round of coronavirus-related government stimulus. The majority of lenders, 68%, believe a potential second federal stimulus will have a negligible effect on the current lending climate. Twenty-seven percent of lenders believe it would increase competition among lenders with lower rates and more borrower-friendly conditions, while 5% believe it will lead to more restrictive covenants and higher rates.
  2. Over the next 6 months, which of the following do you expect to pose the greatest risk to your institution?

    Phoenix’s Q4/20 ‘Lending Climate in America’ survey asked lenders to identify what they believe will pose the greatest risk to their institution over the next six months. The majority of lenders (59%) expect that reduced new business opportunities due to the economy and competition will pose the greatest risk to their institution in the next six months. Nearly one quarter of respondents (23%) indicated deterioration of their current portfolio is their biggest risk, while 14% believe booking riskier loans with a lower risk/return ratio will be their greatest risk over the next six months. Of the lenders surveyed, four percent selected ‘other’ reasons to be the greatest risk to their institution.
  3. Real GDP increased at an annual rate of 33.1 percent in the third quarter of 2020, as efforts continued to reopen businesses. Some parts of the economy continue to advance or have already returned to pre-pandemic activity levels, but others are struggling amid the coronavirus and new virus cases are hitting record numbers, underscoring the difficulty of a full economic recovery without a vaccine. Will the United States experience a continued recovery coming out of the crisis?

    While real GDP increased at an annual rate of 33.1% in Q3 2020 and some parts of the economy are advancing or have returned to pre-pandemic activity levels, others are struggling amid continued cases. When asked, whether the United States will experience a continued recovery coming out of the crisis, eighty-six percent of lenders expect there will be slow growth as things return to normal due to the shutdown and rising COVID cases. Fourteen percent of lenders believe that despite the virus, the economy has pent up demand and companies should prepare for a sustained v-shaped recovery going forward

At Phoenix, our professionals have the expertise and skills to assist businesses that have been impacted by the COVID-19 pandemic. Meet our team to learn more about how our professional’s extensive experience can make a difference today.

The Phoenix Management “Lending Climate in America” Survey is conducted quarterly. The results for the Q4/20 survey were received between 11/10/2020 and 11/24/2020. To see the full survey results for Q4 2020, view the infographic, and sign up to participate in future surveys, please visit http://www.phoenixmanagement.com/about-phoenix/lending-survey.


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