The amount of bank loans to commercial and industrial businesses, which plummeted in the recession, has begun to slowly climb back in Minnesota.

Several large banks reported this week that lending to companies is on the uptick, including Minneapolis-based U.S. Bancorp as well as Wells Fargo, Citigroup and PNC Financial. In Minnesota, banks are lending more money to commercial and industrial customers than they have in almost five years, though still far less than they did before the recession.

It's a good sign for the economy, as businesses borrow money to expand and use lines of credit to build inventory. Midsize firms that are the economy's job-creating engines are driving much of the demand.

"We've seen a lot of middle-market companies investing in buildings and equipment," said Scott Johnson, a senior vice president of business banking at Bremer Bank.

He focuses on contract manufacturers, who were rocked in the downturn. They are growing in confidence, more often using their lines of credit, and starting to hire more people.

"The manufacturers are doing much, much better with the economic growth," he said.

Nationally, fewer companies are falling behind on their loan payments, and lenders are becoming more aggressive, said Toby Madden, an economist at the Federal Reserve Bank of Minneapolis. Banks are fighting to offer better terms and in many cases easing standards to make more loans. Also, loan demand is being driven by an improved economy.

"Businesses might see opportunities to invest," Madden said. "That reinforces itself in new plants and buildings, that means more economic activity is happening, which means that might create more demand for loans. … The good economic activity spurs more economic activity."

The total amount of money loaned by Minnesota banks to commercial and industrial customers ticked upward to $7.3 billion in the first quarter of 2014. Competition between banks is heating up, and customers increasingly have options, Johnson said.

"Customers like to entertain proposals and we're constantly defending that," Johnson said. "You've got to remind them what you did for them in the past."