Lending Freeze

AAA

DEFINITION of 'Lending Freeze'

A period of time when banks either do not have excess money to loan or implement strict rules regarding loan qualification so that less lending is approved. This is a protective measure by the banks to ensure that they do not run out of capital or expose themselves to increased risk. The result is that borrowers have less access to loans, and therefore are unable to secure a mortgage, an automobile loan or business loans, which can negatively impact hiring and expansion.

INVESTOPEDIA EXPLAINS 'Lending Freeze'

Lending freezes occur when banks need to protect against further losses. Banks may not halt lending altogether, but will become more selective when it comes to handing out loans. The credit crisis of 2007-2008 forced companies to make difficult choices; without access to loans, many corporations were forced to make large-scale layoffs, while individuals had very little chance to secure credit.

RELATED TERMS
  1. Build America Bonds - BABs

    Taxable municipal bonds that feature tax credits and/or federal ...
  2. American Recovery And Reinvestment ...

    An act initiated and signed by U.S. President Barack Obama in ...
  3. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  4. Bailout

    A situation in which a business, individual or government offers ...
  5. Credit Crisis

    A crisis that occurs when several financial institutions issue ...
  6. Asset Liquidation Agreement (ALA)

    A contract between the Federal Deposit Insurance Corporation ...
Related Articles
  1. Economics

    Lessons Learned: Comparing The Japanese And U.S. Bubbles

    Find out what the Japanese and U.S. bubbles can tell us about recovering from financial chaos.
  2. Economics

    The New Global Banking Regulations To Avert Future Crisis

    These are the types of policies that are being developed to minimize the risks posed to the global financial system by banks which are too big to fail.
  3. Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
    Economics

    Where NOT To Invest in Latin America

    Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
  4. Do you have the right mix of credit, capital and business savvy to make you an ideal candidate for buying a franchise?
    Investing Basics

    When Is A Franchise The Right Investment For You?

    Do you have the right mix of credit, capital and business savvy to make you an ideal candidate for buying a franchise?
  5. Professionals

    The Top Ways to Fund Your New Business

    Crowdfunding is no magic bullet for funding a business. However, P2P lending companies have made applying for a personal loan easier than it was 10 years ago.
  6. Savings

    10 Mistakes To Avoid When Trying To Save Money

    Addressing the issue of saving money is the most fundamental, yet neglected aspect of personal finance in the U.S. today.
  7. Investing Basics

    Entrepreneur Vs. Small Business Owner, Defined

    An entrepreneur is different from a small business owner, and requires a different temperament.
  8. Retirement

    Become A Certified Financial Divorce Analyst

    Use your financial knowledge to help people preserve their financial integrity after a failed marriage.
  9. Personal Finance

    Examining Credit Crunches Around The World

    Market tops and bottoms have proliferated the financial markets throughout history. Learn how countries dealt with these tough economic periods.
  10. Personal Finance

    Top 6 Ways To Recession-Proof Your Job

    In a recession, financial industry personnel are often hit hard. Find out how to avoid getting the ax.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center