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Small Bank Approvals of Small Business Loans Passes 50% in October for the First Time Since the Great Recession

Biz2Credit Small Business Lending Index for October 2012 Reports Increases in SBA Loans by Smaller Banks; Credit Union Lending Figures Continue to Fall.

NEW YORK, NY, November 13, 2012 – Small banks are approving more small business loans than they reject for the first time since the Great Recession, according to the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2credit.com in October 2012. Small bank lending approvals jumped from 47.6% in September to 50.1% in October. 

The Index found that 14.8%.of funding requests were approved by big banks ($10B+ in assets) in October. It is the highest approval rating percentage for big banks since Biz2Credit began the Index in 2011.

The big jump in small bank lending is due to the increased approvals of SBA Advantage and SBA microloans,” said Rohit Arora, Biz2Credit co-founder and CEO, who oversaw the research. "SBA loans issued by small banks are sometimes sold in the secondary market at a premium, which provides good income. Also since SBA loans have government guarantees, it is safer for small banks to issue them. This is very attractive to smaller banks."

Alternative lenders – accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others – continue to make an impact on small business lending. In September, alternative lenders approval rates rose slightly to 64.7%, up from 64.6% in September. The figure for alternative lenders was the highest recorded since the Biz2Credit Small Business Lending Index began.

The loan approval rate of credit unions dropped for a fifth consecutive month in October down to 49.2% from a mark of 52.4% in September. The figure represented the lowest credit union approval rate since June 2011. 

Because they offer quick approvals, alternative lenders are becoming an increasingly viable option for small business borrowers. This type of financing works well for small and mid-size businesses that encounter short-term cash flow issues,” added Arora, one of the nation's leading experts in small business finance. "Credit unions seem to be losing ground in the small business lending area.”

Month Big Bank
Approval %
Small Bank
Approval %
Credit Union
Approval %
Alternative Lenders
Approval %

Oct. 2011

9.3%

46.3%

56.6%

61.8%

Nov. 2011

10.0%

47.0%

57.0%

62.0%

Dec. 2011

9.7%

47.1%

57.4%

62.2%

Jan. 2012

11.7%

47.5%

57.6%

62.4%

Feb. 2012

11.7%

47.6%

57.8%

62.5%

Mar. 2012

10.9%

47.6%

57.9%

63.0%

Apr. 2012

10.6%

45.9%

57.4%

63.0%

May 2012

10.2%

45.5%

57.6%

63.2%

Jun. 2012

11.1%

47.5%

55.8%

62.9%

Jul. 2012

11.3%

47.4%

54.6%

64.1%

Aug. 2012

10.9%

47.8%

52.9%

64.5%

Sept. 2012

14.2% 

47.6% 

52.4% 

64.6% 

Oct. 2012

14.8% 

50.1%

49.2%

64.7%

* Banks with more than $10 billion in assets are classified as "big banks."

* Banks with less than $10 billion in assets are classified as "small banks."

* Credit Unions are considered a category unto themselves in the Biz2Credit Small Biz Lending Index.

* "Alternative lenders" include accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others.

About the Biz2Credit Small Business Lending Index

Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s online lending platform. Biz2Credit’s connects business borrowers with more than 1,100 lenders nationwide.

About Biz2Credit

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers, and complementary business tools. The company matches borrowers to financial institutions based on business’ unique profile -- completed in less than four minutes -- in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Having arranged $750 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.

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