What is the Senior Loan Officer Survey?

The Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS), conducted quarterly by the Federal Reserve, asks loan officers at roughly 80 large domestic banks and 24 US branches of foreign banks about changes in their lending standards and the demand they are observing for various loan categories. It covers commercial and industrial (C&I) loans, commercial real estate (CRE) loans, residential mortgages, credit cards, auto loans, and other consumer credit.

The key metric from the SLOOS is the net percentage of banks tightening lending standards. If 40% of banks report tightening standards and 10% report easing, the net tightening is 30 percentage points. When this figure is positive and rising, credit conditions are becoming restrictive. When it is negative (more banks easing than tightening), credit is becoming more available. Historically, a net tightening reading above 30-40% for C&I loans has been associated with recession, as it signals that a significant portion of the banking system is pulling back from lending.

The demand side of the SLOOS is equally informative. Even if banks are willing to lend, demand may be weak because businesses and consumers are reluctant to borrow at higher rates. Weak demand combined with tightening standards is the most bearish signal, suggesting both supply and demand for credit are contracting simultaneously. Strong demand accompanied by easing standards is the most bullish, indicating both willingness to lend and willingness to borrow.

For macro investors, the SLOOS is a critical leading indicator because bank lending conditions transmit directly to economic activity with a lag of roughly two to four quarters. Tightening lending standards in Q1 typically mean weaker business investment and consumer spending by Q3 or Q4. The 2023 SLOOS showed significant tightening in the wake of the regional banking crisis, which contributed to the slowdown in commercial real estate lending and business investment observed through 2024. Tracking the SLOOS provides an early, institution-level view of the credit channel that connects monetary policy to the real economy.