C&I stands for commercial and industrial lending
C&I is the banking term for loans that banks make to businesses and industrial companies, as opposed to loans to individuals or real estate projects. A bank's C&I portfolio is the collection of all those business loans on its books. When a bank talks about its C&I business, it means the division that handles lending to companies that need money to buy equipment, expand operations, pay suppliers, or manage cash flow.
C&I loans are different from consumer loans (car loans, mortgages, personal loans) and from real estate loans (commercial property mortgages). They are also different from agricultural lending, which banks often track separately. A bank might report that it has $500 million in C&I loans outstanding, meaning that amount is currently owed by businesses across all the C&I loans the bank has made.
The term appears in bank financial statements, regulatory filings, and when bankers discuss their lending strategy. If you work in business finance or read banking news, you will see C&I used to describe a category of lending activity and risk.
Key Takeaways
- C&I loans go to businesses and industrial companies for operations, equipment, and working capital, not to individuals or real estate projects.
- Banks track C&I as a separate lending category in their financial reports and use it to measure the health of their business lending portfolio.
- C&I loans typically have shorter terms and higher interest rates than real estate loans because the risk profile is different.
- The size of a bank's C&I portfolio tells investors and regulators how much the bank depends on business lending versus other types of loans.
Why banks separate C&I from other lending categories
Banks organize their lending into categories because each type of loan carries different risks and returns. A mortgage backed by real estate is secured by an asset that holds value and can be sold if the borrower defaults. A C&I loan to a manufacturing company is secured by the company's ability to generate revenue and repay from cash flow — a different calculation altogether.
C&I loans also have different terms and pricing. A 30-year mortgage might carry a 6 percent interest rate. A C&I loan to the same company might be a three-year line of credit at 8 or 9 percent, because the bank is taking on more risk and the money is tied up for a shorter time. Separating the categories lets a bank measure how much money it has in each type of lending and adjust its strategy if one category grows too large or carries too much risk.
Regulators also require banks to report C&I lending separately. The Federal Reserve and the Office of the Comptroller of the Currency use these numbers to understand how much credit is flowing to businesses across the economy. When C&I lending grows, it often signals that businesses are confident enough to borrow and expand. When it shrinks, it can signal economic slowdown.
What kinds of loans fall under C&I
C&I covers a wide range of business lending. A small business line of credit that a restaurant uses to buy inventory is C&I. A term loan to a manufacturing company to buy new machinery is C&I. A working capital loan to a logistics company to cover payroll between contracts is C&I. A revolving credit facility that a mid-sized retailer draws on seasonally is C&I.
The common thread is that the money goes to a business entity (not an individual), and the loan is repaid from the company's revenue or operations (not from the sale of real estate). The business might be a sole proprietorship, partnership, corporation, or LLC. It might be a startup or an established company with decades of history. The size can range from a few thousand dollars to hundreds of millions.
What does not count as C&I: a mortgage on a commercial building (that is commercial real estate lending), a loan to an individual to start a side business (that is consumer lending), or a loan to a farmer to buy land (that is agricultural lending). Banks track those separately.
How C&I loans are priced and structured
C&I loans are usually priced based on the bank's cost of funds plus a spread that reflects the risk of the borrower. A strong company with good cash flow and a long relationship with the bank might get a spread of 2 to 3 percentage points above the bank's base rate. A newer company or one with weaker financials might pay 4 to 6 points or more. The bank also charges fees — an origination fee when the loan closes, an annual commitment fee if it is a line of credit, and sometimes a prepayment penalty if the borrower pays off early.
Terms vary widely. A line of credit might be one year and renewable annually. A term loan might be three to five years. Some C&I loans are secured by the company's assets (equipment, inventory, accounts receivable). Others are unsecured and rely entirely on the company's credit and the personal may provide of the owner. Banks use financial statements, tax returns, and cash flow projections to decide whether to make the loan and at what rate.
How to read C&I numbers in a bank's financial statements
When a bank publishes quarterly or annual results, it breaks down its loan portfolio by type. You will see a line that says something like "Commercial and Industrial Loans" or "C&I Loans" followed by a dollar amount. That number represents the total outstanding balance of all C&I loans the bank has made and that borrowers have not yet repaid.
Banks also report the percentage of their total loan portfolio that C&I represents. A bank might have $10 billion in total loans, of which $3 billion is C&I — meaning 30 percent of its lending is to businesses. This ratio tells investors how concentrated the bank is in business lending versus consumer lending, real estate, or other categories. A bank with a high C&I percentage is more exposed to business cycle risk; when the economy slows, businesses cut back on borrowing and may default on existing loans.
Banks also report non-performing C&I loans — loans that are 90 days or more past due or in default. A rising non-performing ratio in the C&I portfolio signals that businesses are struggling to repay, which can be an early warning sign of economic trouble.
C&I lending and the broader economy
C&I lending is a key channel through which banks fuel business growth and economic activity. When banks are willing to lend to businesses at reasonable rates, companies can invest in new equipment, hire workers, and expand. When banks pull back on C&I lending — either because they are worried about risk or because they have less money to lend — businesses slow their expansion and hiring.
During recessions or financial crises, C&I lending often contracts sharply. Banks become more cautious, tighten their lending standards, and charge higher rates. Businesses that were counting on credit to fund operations suddenly find it harder to borrow. This credit squeeze can deepen and prolong a recession.
The Federal Reserve monitors C&I lending closely as part of its assessment of credit conditions in the economy. When the Fed raises or lowers interest rates, one of the channels through which that change affects the economy is through C&I lending — higher rates make it more expensive for businesses to borrow, which can slow hiring and investment.
Frequently Asked Questions
Is a C&I loan the same as a business loan?
C&I is a specific type of business loan. All C&I loans are business loans, but not all business loans are C&I. A mortgage on a commercial building is a business loan but not C&I — it is commercial real estate lending. C&I specifically means loans to businesses for operations and equipment, not for real estate.
Can a small business get a C&I loan?
Yes. C&I loans range from a few thousand dollars to hundreds of millions. A small business can get a C&I line of credit or term loan from a bank. The terms, rate, and amount depend on the business's financials, credit history, and the bank's lending standards. Smaller loans may require a personal may provide from the owner.
What is the difference between C&I and a line of credit?
A line of credit is a type of C&I loan. C&I is the broad category of business lending. A line of credit is a specific structure where the bank sets a maximum amount the business can borrow, and the business draws and repays as needed. A term loan is another type of C&I loan where the business borrows a fixed amount upfront and repays it over a set schedule.
Why do C&I loans have higher interest rates than mortgages?
C&I loans are riskier than mortgages because they are not backed by real estate that can be sold if the borrower defaults. A C&I loan depends on the business's ability to generate revenue and repay from cash flow. That risk is harder to predict and manage, so banks charge higher rates to compensate.
How do banks decide whether to make a C&I loan?
Banks review the company's financial statements, tax returns, cash flow projections, credit history, and the owner's personal credit. They assess whether the company has enough revenue to service the debt and whether the loan purpose makes business sense. They also consider the company's industry, competition, and economic outlook. Stronger companies with stable cash flow and good credit get approved at better rates; weaker companies may be denied or offered terms at higher rates.