The Federal Reserve Bank of Cleveland has published new research estimating that banks’ indirect exposure to business lending through nonbank lenders remains limited relative to banks’ direct business loan holdings. The analysis estimates that 6.1 percent of all business loans in 2024 were made by nonbank lenders but indirectly funded by banks, a share that has largely stayed in the 5 percent to 6 percent range over the past 20 years. The research says that range can be viewed as an upper bound of the risk nonbank business lending poses to banks because banks typically finance nonbank lenders with debt, which is repaid before equity investors. It also traces the longer-term shift in business lending away from banks and toward nonbanks: banks’ direct share of business lending fell to 47.1 percent in 2024 from 56.7 percent in 1980, while nonbank lenders’ share rose to 37.4 percent from 28.8 percent.
Federal Reserve Bank of Cleveland2026-06-22
Federal Reserve Bank of Cleveland research finds banks indirectly funded 6.1 percent of business loans through nonbanks in 2024
The Federal Reserve Bank of Cleveland published research estimating that banks indirectly funded 6.1 percent of business loans through nonbank lenders in 2024. That share has stayed near 5 percent to 6 percent for two decades and is described as an upper-bound risk measure because banks typically provide debt funding, with equity investors absorbing losses first. The research also shows business lending has gradually shifted from banks to nonbanks since 1980.