Many small businesses rely on lenders to keep their operations running, but securing financing may become increasingly difficult.
According to the Federal Reserve’s latest Senior Loan Officer Opinion Survey on Bank Lending Practices, commercial and industrial lending to medium- and large-sized firms remained largely unchanged from the previous survey, while banks reported tightening lending standards for smaller businesses.
The tightening also extended to commercial real estate, with banks reporting stricter standards for construction, land development, and multifamily property loans. Lenders cited an increasingly challenging and uncertain economic environment as a key factor behind these decisions.
“Credit extension is now starting to tighten,” said Brian Riley, Director of Credit at Javelin Strategy & Research. “That is consistent with our observation, and we think it is very appropriate. The industry has several big events to settle, including Capital One’s next step and its new debit network, Chase’s Apple Card integration, and rates that will keep rising until inflation tempers.”
Gauging Consumer Exhaustion
The combined pressures of elevated inflation and interest rates are also weighing on consumers. Many are facing higher costs for housing and automobiles, while financing purchases over longer periods to manage higher borrowing costs.
Combined with rising prices for everyday essentials such as gas and groceries, these pressures are also prompting strategic shifts across the credit card industry.
“A recent Javelin Impact Note promised that 2027 will be a boring year in credit cards and that lenders need to take a beat and reap what they sowed,” Riley said. “New account volumes are up, many issuers loosened their credit standards in 2026, and consumers are exhausted with rates, inflation, and tariffs.”
Looming Regulatory Uncertainty
Regulatory uncertainty presents another challenge for lenders. Along with concerns about potential state and federal laws that could reshape the existing interchange model, proposals such as the Credit Card Competition Act (CCCA) could fundamentally alter the U.S. payments network infrastructure.
“One interesting shift from the midterm elections is that the Credit Card Competition Act is on the ropes,” Riley said. “With Senator Durbin retiring and Marshall losing to the blue wave, it is likely that credit card lenders will be tight for the first half of 2027—then get back to business as we approach the latter part of 2027.”
