U.S. companies are growing more cautious about tapping available credit lines even as large lenders up their credit limits.
According to the Commercial Finance Association, a trade group that represents asset-based lenders, the 20 largest lenders increased their total credit lines to $178.5 billion in the fourth quarter, up 6.6% from the same period in 2011.
However, businesses used just 39.9% of that available credit during the quarter, down from 41.5% just three months earlier and 41.8% at June 30, the trade group said in a report scheduled to be released Monday.
Robert Trojan, the Commercial Finance Association's chief executive, says that bickering in Washington over such issues as the fiscal cliff, sequestration and the debt ceiling has made many businesses reluctant to take on more debt. He said in interview that demand is likely to remain muted "until Washington gets its act together."
"It's just one uncertainty after another," Trojan said. Lenders "are providing the capital, but businesses are not taking advantage of the capital that's available."
Companies' use of asset-based credit lines had been rising steadily since bottoming out at 34.6% in the fourth quarter of 2009, but borrowing is nowhere near what it was prior to the financial crisis, when credit-line utilization was often in the 50% range.
In a news release, the Commercial Finance Association said that the $85 billion in government spending cuts resulting from the sequestration would have an especially "chilling effect on the economy in the coming weeks and months. This could be compounded by the looming showdown on the federal debt limit."
The report, which highlights quarterly trends in asset-based lending, also showed that credit quality is improving. Nonaccruing loans in lenders' asset-based portfolios fell to 0.75% of outstanding loans at Dec. 31, down from 1.23% a year earlier.