Eighty percent of banks surveyed expect to increase lending to mid-market businesses by at least 10 percent over the next 12 months, according to the Mid-Market Lending Survey Report, a new banker survey co-sponsored by the American Bankers Association and CapitalStream of Seattle, Wash.

"The economic environment is prime for increased commercial lending activity, and the mid-market is one of the fastest growing segments of the revived commercial lending market," said James Chessen, ABA’s chief economist. "Banks are looking for efficient ways to serve customers."

Survey respondents are expecting moderate to strong growth in lending originations over the next year. The majority of growth is expected from commercial real estate, lines and term loans, which compose 90 percent of current origination volume. Ninety-four percent of respondents expect growth through direct lending. Sixty percent also expect growth in loan participations and loan syndications.

The survey addresses the top challenges facing banks in managing their mid-market business relationships and improving effectiveness to expand their credit portfolios. The new report reveals the best practices and systems used across the industry to originate, underwrite and manage commercial lines, loans and mortgages. Studies show that front-end technology helps lenders achieve the business objectives of cost reduction, risk management and customer knowledge.

According to the survey, using integrated front-office systems to prepare loan documents decreases data entry by 32 percent. Additionally, the turn-around time for approving credit and issue final documentation improves by as much as 72 percent with automated processing.

"With over 80 percent of survey respondents demanding greater automation in their front office operations and planning integration initiatives over the next 2 years, the study validates what we have been seeing at our commercial lending clients," said Mike Pennell, vice president, product and marketing at CapitalStream. "Leading banks are making investments in technology and process improvement to drive business growth and profitability through more efficient, consistent and integrated front office operations."

Research for the report was conducted from March through May 2004. More than 100 bank executives were interviewed to identify the business opportunities and challenges associated with mid-market businesses lending. Mid-market businesses generate sales between $5 million and $75 million, or have credit limits between $500,000 and $15 million.

The full report is available free to ABA member banks, or for $75 to non-member banks on the ABA Web site at http://www.aba.com, and the CapitalStream Web site at http://www.capitalstream.com

The American Bankers Association (ABA) brings together all categories of banking institutions to best represent the interests of this rapidly changing industry. Its membership — which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks – makes ABA the largest banking trade association in the country. .


CapitalStream provides software and consulting services that enable commercial banks and finance companies to collaborate, integrate and operate more effectively across their front office operations. CapitalStream solutions streamline data gathering, deal structuring, credit analysis, document generation, booking, account monitoring and ongoing risk management to more effectively originate transactions and manage commercial relationships. CapitalStream transforms the paper-based operations of mid market, small business, equipment leasing and commercial real estate groups by reducing costs, risk and processing times to grow their portfolios without increasing headcount. The Mid-Market Lending Survey is the latest in a series of industry research reports from CapitalStream designed to provide insight into the overall commercial finance industry including specific reports on small business lending, equipment finance and commercial real estate lending. For more information, visit http://www.capitalstream.com or contact a CapitalStream Representative toll-free at 1-866-779-4733.

Sandra Sick
Capital Stream, Inc.
206-548-1703
sandras@capitalstream.com