Executive Summary
If you're a small or mid-sized business looking to borrow, the loan market in 2025 is stable but selective. Loan growth has flattened, interest rates are high but steady, and banks remain cautious about risk.
At the same time, private credit is stepping in to fill gaps, giving borrowers more options. The good news: if your business is healthy, capital is available—but you may need to shop around and be ready to negotiate.
Key Takeaways:Commercial and Industrial (C&I) loan growth has leveled off after a strong post-COVID runup.Borrowing costs remain elevated, but spreads are beginning to narrow.Banks are still cautious, but more open to lending than in 2023.Private credit is a growing option for flexible, non-bank financing.Regional trends vary—borrower experience depends on local conditions.C&I Lending: What You’re Likely Seeing on the Ground
Loan growth has hit a plateau. As of early 2025, C&I loan volumes at U.S. banks total about $2.78 trillion.
That’s barely up from a year ago, and far slower than the rapid growth in 2022. Why? Borrowers are more cautious, and banks are lending more selectively.The Breakdown: If you’re looking to borrow, expect banks to ask for:
Strong cash flow coverageCollateral or guaranteesClean financials and transparent business plans
Even longtime customers are seeing tighter terms, though some banks are easing slightly due to competitive pressure. Compared to 2023, you may find that approvals are quicker and spreads a little more favorable—but diligence remains high.Rates: Still High, But Stabilizing
C&I loans are mostly floating rate. So, when the Federal Reserve raised rates in 2022 and 2023, your borrowing costs went up fast. Many borrowers faced 7—9% rates or higher. The Fed cut slightly in late 2024, but rates remain historically high.
For CFOs, obtaining a bank loan is certainly possible — especially if your company has decent financials — but expect a relatively conservative stance from lenders on amount and structure. Banks have capacity to lend (liquidity is ample), yet they are prioritizing prudent risk management as we head into 2025.The Breakdown: Banks are liquid but selective.
Rates probably won’t rise further this year.Fixed-rate options may become more attractive if rate cuts are expected.Banks may be more flexible on fees or spreads, especially for strong credits.Regional Trends
While national...