Banks made credit easier to get in the first quarter but small companies and consumers were less enthusiastic about borrowing than big firms, showing credit markets thawing unevenly.
The Federal Reserve's quarterly survey of senior bank loan officers released on Monday showed the financial system continued to heal from the credit crisis that punished the economy with a deep recession.
While the report showed lingering damage in residential housing markets where demand for mortgages declined, a surprise bright spot came in an increased demand for commercial real estate loans.
Despite the consistent easing of standards and terms over the past year, loan demand remains relatively tepid, particularly at the household level, said Barclays Capital economist Michael Gapen.
The Federal Reserve has cut interest rates to near zero and will soon complete the buying of more than $2 trillion in assets in hopes of stimulating lending activity to accelerate economic growth.
But banks have been cautious about lending and consumers wary of piling on debt, and the data showed there was still some ways to go before credit conditions return to normal.
It will still be some time before the credit floodgate bursts, but the cracks are slowly developing at the dam, said Millan Mulraine, an economist for TD Securities.
The loan officers survey showed some gains in the need to borrow, a sign that businesses may be picking up investment and that consumer spending, which makes up about 70 percent of U.S. output, may also accelerate.
Around 27 percent of respondents reported increased loan demand by large companies, while the appetite for loans from smaller firms rose 10 percent, the Fed said. A robust pickup in appetite for loans from small firms -- who create a substantial share of new jobs -- is seen as a key part of lowering a lofty unemployment rate.
Demand from consumers for credit was flat except for a slight rise in requests for auto loans, although the willingness of banks to extend loans to consumers hit the highest level since 1994.
The report showed a slide in requests for home loans, as analysts had expected, given the depressed state of the U.S. housing market. Not only were standards tight, but 34 percent of banks observed weaker demand.
It shows some signs of healing, but it's disproportionate across sectors, Bank of America Merrill Lynch economist Michelle Meyer said. The corporate sector has been the bright spot ... and the consumer has been sluggish.
In the previous quarter small business loan demand had increased 6 percent. It was the first two consecutive months of gains since the first half of 2006.
Analysts said weak loan demand was the result of the ongoing process of shedding debt among households and small business after the disruptions of the financial crisis and the recession.
In addition, high gasoline prices and continued high unemployment rates are forcing wary consumers to keep their wallets in their pockets.
That's indicative of the headwinds that the consumers are facing, Meyer said.
(Reporting by Mark Felsenthal; Editing by Neil Stempleman, Bernard Orr)