U.S. loan issuance in 2008 tumbled 55 percent to $764 billion, the lowest volume since 1994, as the global credit crunch choked off lending to American businesses, according to data from Reuters Loan Pricing Corp.

Loan issuance was down from $1.69 trillion in 2007 as banks focused on repairing balance sheets damaged by mortgage losses and had little interest in underwriting riskier deals, RLPC reported on Tuesday.

Investment-grade loans fell to $319 billion, down 52 percent from 2007's 658 billion, while leveraged loan issuance slid to $294 billion, down 57 percent from $689 billion in 2007, RLPC said.

JPMorgan was lead arranger for U.S. loans in 2008, with $198.5 billion, or 26 percent market share, followed by Bank of America, with $137.4 billion, or 18 percent market share, and Citigroup, with $116 billion, or 15 percent market share.

Lending will likely remain anemic in 2009, according to an RLPC quarterly survey of loan market participants. Nearly 54 percent of respondents said their lending will be limited to key relationships.

Institutional loans were especially hard hit as collateralized loan obligations disappeared from the market. Loans purchased by institutional investors slid to $69.6 billion, down 84 percent from 2007's $425.8 billion.

Loans backing leveraged buyouts, a key source of loan growth for the past several years, were down by 80 percent to just $41.3 billion from $209.9 billion.

Much of the loan slump came in the second half of the year, after Bear Stearns collapsed and Washington Mutual Inc(WAMUQ.PK) was seized by regulators, sending convulsions through the financial system.

As banks scrambled to limit risk, bridge or temporary loans became the only viable funding source for many companies. A $14.5 billion one-year bridge loan backing Verizon Wireless' acquisition of Alltel Corp was the largest deal of the year in the loan market, according to RLPC.