a source of funding, perhaps because of a decline in their own financial condition or because of a tightening in other aspects of credit supply, they may end up facing higher interest rates than would otherwise be the case. conclusion in conclusion, the health of the u. s. economy depends importantly on the vitality of the small business sector, and continued access to credit on competitive terms is necessary for that vitality. on balance, since last fall credit supply conditions have almost surely tightened for the vast majority of small businesses. credit appears to be generally available, but at a higher cost. only a small fraction of small business owners report that credit is their main business concern. demand for their products is much more problematic. looking forward, continuing declines in the value of small businesses'real estate assets have the potential to substantially affect the ability of those small businesses to borrow. similarly, declines in the value of real estate may affect the ability and willingness of banks and other lenders to supply loans. indeed, this is likely already occurring to some extent at some banks across the full spectrum of bank sizes. lastly, because of interdependencies between small business and household finance, declines in the financial condition of households can also affect both the terms of those households'small businesses loans and their ability to borrow. for all of these reasons, the federal reserve will continue to monitor closely the effects of financial market conditions on small business access to credit. more generally, i assure you that the good health of the small business sector is an important consideration for the federal reserve as we strive to fulfill the dual mandate given to us by the congress to promote both price stability and sustainable economic growth.

' s spread ) rose modestly from the corresponding survey week of three months earlier. of particular importance for small businesses, however, are the facts that these spreads jumped significantly both on loans originated by smaller u. s. banks and on smaller commercial loans – that is, those loans below $ 100, 000. despite tighter credit standards and loan terms, growth in the dollar amount of commercial loans at u. s. banks was quite well maintained in the first quarter of 2008. particularly noteworthy from the point of view of small businesses is the fact that after growing almost 20 percent in the fourth quarter of 2007, commercial loans at small banks continued to expand at a rate of almost 12 percent in this year's first quarter. 3 thus, although slowing somewhat, commercial loan growth has held up in recent months even though banks'terms have tightened and economic growth has slowed, the latter driving down the demand for small business and other commercial loans. on balance, this suggests that credit is generally available, albeit at a higher cost. another source of information about small business credit supply conditions is the monthly survey of the national federation of independent businesses ( nfib ). the results of the most recent nfib survey, conducted in march, suggest that credit supply conditions for small businesses have held up fairly well over the past several months. for example, over the past few quarters only about 3 percent of survey respondents have reported that financing conditions and interest rates were their main business concern, and for march that number was only 2 percent. 4 in addition, according to the nfib survey, the average short - term interest rate paid by borrowers has remained at the low end of its historical range. on a less board of governors of the federal reserve system ( 2008 ), " the january 2008 senior loan officer opinion survey on bank lending practices " ( january ). in october, a net 10 percent of banks reported tightening lending standards to smaller firms. the net percent of banks is defined as the percent tightening less the percent easing standards. the first quarter's numbers have been adjusted for some statistical anomalies in february. these levels are far below their peaks of the early 1980s, when more than one - third of respondents reported that financing conditions were their main concern. positive note, in recent months the net percentage of nfib survey respondents that reported credit was harder to obtain over the previous three months and the net percentage that expected credit conditions to tighten over the next three months have been at the upper end