WASHINGTON — Some banks continued to make it easier for large companies to borrow in the fourth quarter as demand for business loans increased, but few banks changed standards for smaller firms, the Federal Reserve said Monday.

Banks that eased their terms and standards were also almost all large banks, according to the Fed's Senior Loan Officer Survey for October through December.

The report said some banks eased terms on commercial and industrial loans.

"Of banks that reported having eased standards or terms on C&I loans, large majorities pointed to increased competition from other banks and nonbank lenders, as well as to a more favorable or less uncertain economic outlook, as reasons for the changes," the U.S. central bank said. Banks also cited reductions in defaults by borrowers in the public debt market and an increased tolerance for risk.

Of the banks reporting stronger demand, about 75% said the demand was due in part to merger-and-acquisition activity while less than half noted increased inventories and investment in plants and equipment.

About a tenth of domestic banks reported an increase in demand for commercial real-estate loans, which is the strongest reading since early 2006.

The financial crisis led banks to tighten lending sharply from the end of 2008. Despite the recent easing of some standards, lending conditions remain tighter than they were before the economy's downturn.

The Fed survey was based on responses from 57 domestic banks and 22 U.S. branches and agencies of foreign banks.

Results on loans to households were little changed. A small fraction of banks eased standards on consumer credit card and other loans in the fourth quarter.

Despite the recent loosening in lending standards and record-low interest rates, continued weakness in demand for loans by companies and consumers have kept economic growth low.

The weak demand for loans from companies and households has been a major issue for the recovery. The recovery has been painfully slow, with unemployment stuck close to 10% more than a year after the recession ended. Hit by the financial crisis and worried about the economic outlook, companies are hiring cautiously while consumers are borrowing and spending less.

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