Let’s wind the clock back a couple of months.

In April and May, commercial and industrial lending was strong, companies were opening up new revolvers and refinancing at reduced rates. Banks were allowing extended maturities and were eager to put money to work; so much so, that some banks were loosening lending standards to offer favorable terms to those with less than strong credits.

In May, there was even talk of banks underpricing risk again, though in reality most banks were still requiring strong collateral and remained diligent with valuations on receivables, inventory and other assets. Banks have a more stringent loan review process since the financial meltdown, so it may just be that they have a better understanding of the risk to more competitively price a loan.

Now, fast forward two months to July 2011 and uncertainty abounds.

This statement was the lead paragraph from a recent press release from Thomson Reuters Loan Pricing: “The correction in the loan market in the second quarter of 2011 has taken a toll on riskier assets struggling to clear market, sources told Thomson Reuters LPC. Issuers are paying more to get deals done or holding off until market sentiment improves. Coupled with the summer slowdown, the recent pullback may be prolonged as loan and bond investors are increasingly cautious on the back of heightened macroeconomic and sovereign debt concerns at home and abroad.”

The debt ceiling “debate” in Washington, in addition to concerns about the economy, is causing anxiety for many CFOs and business owners. According to a recent survey by the Association of Finance Professionals, around half of survey respondents were concerned about the potential government default. The general consensus, however, seems to be that the political gamesmanship will ultimately give way to a resolution to avoid a government default on the Fed’s debt obligations, the consequences of which would be global in reach and detrimental beyond our comprehension. An actual default could cause the cost of credit to increase significantly and possibly freeze the credit markets again.

Unfortunately, even speculation about a government default causes anxiety in an already uncertain credit market, and makes business and budget planning more difficult. Hopefully we’ll see a real resolution in the next week, not just an interim solution.

To end this one, here’s a timely quote from a couple of thousand years ago: “The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled.” — Marcus Cicero. 106-43 B.C.