Global consulting firm J.S. Held has published the results of the Q1 2026 “Lending Climate in America” survey, offering insight into how lenders are assessing economic conditions, credit risk and borrower readiness. The latest survey results suggest that while capital remains available, borrowers should prepare for a more selective and disciplined lending environment as economic uncertainty grows. Lenders, increasingly divided on the near and longer-term outlook, are recalibrating interest rate expectations and credit standards, placing greater emphasis on fundamentals, visibility and downside planning when assessing borrower risk.
Lenders’ Economic Outlook Reflects Rising Uncertainty
Lender optimism around near-term US economic performance softened in the first quarter, with most respondents now expecting the economy to perform at a “C” level or below over the next six months. While a subset of lenders continues to hold an optimistic view, expectations have become increasingly dispersed, reflecting less consensus and greater uncertainty around the economic trajectory. Longer-term expectations remain largely unchanged though lenders continue to skew cautious, with nearly half anticipating only modest economic performance beyond the next six months.
“What differentiates this quarter is not a uniform shift toward pessimism, but a move away from consensus toward a more fragmented set of expectations about the economic outlook,” said J.S. Held Senior Managing Director and Strategic Advisory Practice Leader, Michael Jacoby. “As expectations around growth and interest rates become less aligned, lenders are relying more heavily on fundamentals, visibility, and downside planning when evaluating risk.”
Lending Remains Active, but Credit Selectivity is Increasing
A majority of lenders plan to maintain current loan structures, but the share doing so declined meaningfully from the prior quarter. At the same time, a steady portion of lenders report plans to tighten credit terms, signaling a move away from broad accommodation toward more selective underwriting. This approach suggests borrowers may encounter uneven credit conditions depending upon sector exposure, balance-sheet strength, and the clarity and predictability of operating performance.
Interest Rate Expectations Have Reset
Lenders’ expectations for Federal Reserve policy shifted notably in Q1 2026. A majority of respondents now anticipate interest rate increases or no change over the next six months, reversing the easing expectations seen last year. This reflects concerns around inflation persistence and economic durability and reinforces expectations for a higher-for-longer interest rate environment.
“Capital is still available, but lenders are becoming more selective in how and where they deploy it,” said Director Kevin Doyle, who oversees the survey. “For companies facing pressure or evaluating financing options, this environment rewards preparation. Borrowers that can clearly articulate liquidity, operating resilience, and realistic scenarios are far better positioned than those relying on favorable market conditions alone.”
Certain Industries Face Heightened Volatility
Lenders identified finance and insurance as the sector most likely to experience volatility over the next six months, followed by energy and power. Expectations for volatility increased sharply in these sectors compared to the prior quarters, reflecting rising sensitivity to interest rates, capital adequacy, deal activity and valuation pressure.
Borrowers Signal Continued Investment Focus
Even as lenders apply greater scrutiny to credit decisions, survey participants indicate that many borrowers remain focused on forward-looking initiatives. Respondents pointed to increased expectations around customer plans for capital improvements, product and service innovation, and hiring over the coming year, reinforcing a lending environment that is selective, but not static.
Experienced Support for Complex Business Challenges
When organizations and investors face decisions that materially affect enterprise value, J.S. Held helps clarify complexity and support informed action grounded in operational, financial, and strategic insight. Clients engage J.S. Held across the investment lifecycle for hands-on support in moments requiring disciplined execution, aligned priorities and outcomes that meet stakeholder expectations.