Global consulting firm J.S. Held released its proprietary “Lending Climate in America” survey results from Phoenix Management, a part of J.S. Held.  The second quarter survey results highlight lenders’ views on important issues, including policy decisions along with their national and global impact. 

“The impact of the recent tariff changes and the future outlook are clearly depicted in our Q2 survey.  A whopping 67% of lenders now believe a U.S. recession has the strongest potential to affect the economy, which was dramatically higher than the 11% in Q1.  And the industries expected to experience the greatest volatility are those that have been most impacted by increased tariffs - consumer products, retail trade, and manufacturing,” says Michael Jacoby, Senior Managing Director of Phoenix Management, a part of J.S. Held and the Strategic Advisory Group practice lead.  “Short term expectations declined from a GPA of 2.33 in Q1 to 2.10 in Q2, a surprisingly modest decline, and the increase in expectations over the next 6 to 12 months (from 2.11 to 2.53) suggests a belief that much of the uncertainty surrounding the tariff situation will be resolved in a somewhat satisfactory manner by year end – but not before inflicting pain in the short term. The wait-and-see approach of many lenders can be seen in the dramatic decline of lenders in the sub $15 million loan market that has migrated from tightening loan structures in Q1 to maintaining loan structures in Q2.  This mirrors what we have been seeing with the lenders to the vast majority of our clients.”

Each quarter, Phoenix Management, a part of J.S. Held, surveys lenders to identify important trends focused on the latest economic issues, business drivers, and credit trends in the current lending climate.  The “Lending Climate in America” survey provides valuable information to lenders, attorneys, private equity sponsors, and the financial news media, exploring topics like:  

What factors do lenders see as most likely to impact the US economy in the next six months?

Phoenix’s Q2 2025 “Lending Climate in America” survey asked lenders which factors could have the strongest potential to impact the economy in the upcoming six months. Sixty-seven percent of lenders are paying the most attention to the possibility of a U.S. recession, while 40% of lenders believe overall political uncertainty has the strongest potential to impact the economy. Lenders also expressed moderate concern regarding the possibility of constrained liquidity in capital markets. To see the full results of Phoenix’s “Lending Climate in America” Survey, please visit https://www.phoenixmanagement.com/lending-survey/

What shifts do lenders observe in their customers’ hiring and capital improvement plans?

Lenders revealed what actions their customers may take in the next six months. Over half of the surveyed lenders believe their customers will raise additional capital.  Most telling was that lenders believe only 3% of their customers have plans to hire new employees (down from 56% in 1Q) and only 23% have plans for capital improvements (down from 67% in 1Q).

Which industries are expected to see the most volatility over the next six months?

For the first time in recent memory, the 3 industries that respondents identified as most likely to experience volatility in the next six months were different from the prior quarter - consumer products (60.0% versus 20.7%), retail trade (43.3% versus 31.0%), and manufacturing (33.3% versus 20.7%).

How do lenders plan to adjust their loan structures?

Additionally, Phoenix’s “Lending Climate in America” survey asked lenders if their respective institutions plan to tighten, maintain, or relax their loan structures for various sized loans. For larger loan structures (greater than $25M), the plan to maintain loan structures remained relatively constant from Q1 to Q2, decreasing by 8 percentage points. As loan sizes decrease, the percentage of lenders that plan to maintain (as opposed to increase) their loan structures increased – quite dramatically in the under $15M range. 

How has lender sentiment toward the US economy changed from Q1 to Q2?

Lender optimism in the U.S. economy decreased for the near term, moving from 2.33 in Q1 2025 to 2.10 in Q2 2025. In this current quarter, there is heavy expectation of a C level performance (63%), with the remainder split between D and B levels. More telling, lender expectations for the U.S. economy’s performance in the longer term increased sharply from 2.11 to 2.53. Of the lenders surveyed, 57% believe the U.S. economy will perform at a B level during the next twelve months, a hefty increase from the prior quarter. 

The “Lending Climate in America” survey is administered quarterly to lenders from various commercial banks, finance companies, and factors across the country. Phoenix Management, a part of J.S. Held, collects, tabulates, and analyzes the results to create a complete evaluation of national attitudes and trends. To view the full results, visit:  https://www.phoenixmanagement.com/lending-survey/.