Banking institutions large and small are gradually easing their lending standards due to decreased demand for loans. The Federal Reserve Bank Senior Loan Officer Opinion Survey reported that demand for commercial and industrial loans decreased across the board in the fourth quarter after regaining ground the first half of 2010. Banking institutions were surveyed with regard to their lending standards. The survey found the majority of lenders having not changed their lending requirements from the third to fourth quarter; however, many small firms are tightening their standards. In September, a survey by the Office of the Comptroller of the Currency found the same trend. Most large banks reported a slight ease of underwriting standards with regard to commercial and industrial loans. 12.3% of surveyed large banks eased somewhat on their lending to other large and middle-market firms, while 10.7% eased up for lending to small firms. However, those small business have not yet greatly reaped the benefit. Large firms eased up the most on the spreads of loan rates over the bank's costs of funds (42.1%), costs of credit lines (29.8%), and the maximum maturity of loans or credit lines (21.1%). Small firms eased up the most on the spreads of loan rates over the bank's cost of funds (28.1%), the costs of credit lines (14.3%), and the maximum maturity of loans or credit lines (7.1%). No institution eased up considerably in any category. Of the large to mid-sized firms, 55.6% reported a less favorable or more uncertain economic outlook as a very important reason for easing their standards, while 66.7% said a reduced tolerance for risk was a very important reason. Small banks listed aggressive competition as the most important reason for easing lending standards (51.9%). Write to Christine Ricciardi.