Three years after credit markets froze, two crucial forms of bank lending that remained stubbornly weak are finally showing signs of life, another indicator that the credit crisis is on the mend, The Wall Street Journal reported.

Small business lending and the use of existing lines of credit, both slow to rebound, are showing faint but discernible signs of recovery. Small business lending dropped 10.5 percent at the largest banks between March and December 2010.

At U.S. Bancorp, for example, small business loans outstanding generated by metropolitan branches and in-store locations grew 22 percent from a year earlier, outpacing a 4.5 percent increase in commercial lending. That was largely due to gains in market share, but existing customers also are taking out new loans, said Chief Financial Officer Andy Cecere.

The uptick in small business lending and the use of existing lines of credit could help businesses expand and reduce unemployment, which is crucial to a broader economic recovery. Commercial and industrial lending, the most widely tracked measure of business-loan demand, had already improved at the end of last year, and growth continued for the second quarter in a row.

“We re seeing a pickup, but it’s still tenuous,” said John Daniels, credit products executive for commercial banking at Bank of America Corp.

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