SMALL-BUSINESS LENDING · SEPTEMBER 8, 2026
Small-Business Credit Lines Drive Higher New Lending in Fed Survey
The Kansas City Fed's June 25 survey found new small-business loan balances up 9.9% from a year earlier, driven by a 31.1% rise in new credit lines, while standards continued to tighten on net.
What the June 25 survey reports
Source publication date: June 25, 2026. The Federal Reserve Bank of Kansas City's national Small Business Lending Survey covered 144 responding banks with more than $72 billion in reported small-business loans. Using the survey's consistent respondent subset, total new small-business loan balances increased 9.9% from the first quarter of 2025. New credit lines rose 31.1% while new term-loan balances declined 0.9%. The survey defines a small business as a firm with $5 million or less in annual gross revenue.
- 01New balances rose 9.9%
- 02Line usage edged higher
- 03Standards tightened on net
Demand and line use increased
Respondents of all bank sizes reported stronger loan demand on net for the first time since the first quarter of 2022. Median credit-line usage edged from 40.3% to 40.7% during the quarter, and variable-rate lines represented about 91% of total line usage. These figures describe surveyed portfolios; they do not establish the amount, pricing, or availability of credit for a particular company.
Credit quality and standards still matter
The survey said the longer-running patterns of tightening credit standards and declining applicant credit quality continued. About 10% of respondents on net reported tighter standards, even as application approval rates increased for both small and large banks. Banks identified inflation, trade policy, and labor costs as important potential influences on future demand, underscoring why lenders may test margins and cash flow even when credit volume is expanding.
Practical borrower takeaway
Build a borrowing-base and cash-conversion analysis from the company's own sales, gross margin, receivable aging, inventory turns, supplier terms, seasonality, and customer concentration. Match term debt to long-lived assets and revolving credit to short-term working-capital needs. Model the contractual benchmark, spread, floor, and repayment cycle for a variable-rate line, and maintain reporting and covenant discipline after closing. Final availability and terms remain lender-specific.
Small businesses should size revolving credit from the cash-conversion cycle, document eligible receivables and inventory, and preserve covenant and liquidity headroom rather than treating industry-wide line growth as automatic availability.
Discuss a financing need →This independent summary is based on the cited source and is provided for general educational purposes only. Terms and program requirements may change.