This paper examines the impact of climate risk on credit supply and tests its predictions using data on wildfires and corporate loans in Spain. The findings reveal a significant decrease in credit following climate-driven events, driven by outsider banks (large and diversified) which significantly reduce lending to firms in affected areas. In contrast, local banks (geographically concentrated) reduce their loans to opaque firms to a lesser extent due to their access to soft information, without increasing risk. The study also finds that employment decreases in areas affected by wildfires where local banks are not present. The research contributes to the literature on banking and climate-related shocks, highlighting the role of soft information in mitigating the impact of climate risks on credit supply.This paper examines the impact of climate risk on credit supply and tests its predictions using data on wildfires and corporate loans in Spain. The findings reveal a significant decrease in credit following climate-driven events, driven by outsider banks (large and diversified) which significantly reduce lending to firms in affected areas. In contrast, local banks (geographically concentrated) reduce their loans to opaque firms to a lesser extent due to their access to soft information, without increasing risk. The study also finds that employment decreases in areas affected by wildfires where local banks are not present. The research contributes to the literature on banking and climate-related shocks, highlighting the role of soft information in mitigating the impact of climate risks on credit supply.