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Biz2Credit Small Business Lending Index for December 2011 Reports Loan Approval Rates Rose at Small Banks and Alternative Lenders, Dipped at Big Banks

Monthly Analysis of 1,000 Funding Requests Finds Small Banks, Credit Unions and Others Continue to Increase Lending to Entrepreneurs While Big Banks Remain Cautious

NEW YORK, Jan 11, 2012-- The Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2credit.com, found that approval rates of small business financing requests by small banks and non-bank lenders increased to their highest levels of 2011 during December.

The big story in small business lending continues to be the activity of alternative lenders -- credit unions, as well as Community Development Financial Institutions (CDFI), micro lenders, and others. They approved 62.2% of the funding requests , a rise from 62% in November. Within the alternative lender category, credit unions became increasingly active in small business lending in 2011. Credit unions granted 57.4% of small business funding requests up from 57% in November. December loan approvals by small banks increased to 47.1%, their highest rate of the year, up from 47% in November.

"Optimism is on the rise as the new year begins. We have seen a 30% increase in the volume of new loan applications, which is a good sign," said Biz2Credit's Rohit Arora, named "Top Entrepreneur of 2011" by Crain's New York Business and recognized as one of the country's top experts on small business finance.

Big banks were the only category of lender that dipped at the end of 2011. Approvals by banks with assets between $10- $50 billion fell in December to 9.7%, thereby reversing a three-month upward trend.

"Large banks are coming back in the market, albeit cautiously. However, the big banks wanted to shore up their capital base at end of 2011 and thus reduced their outstanding loan portfolio in December," Arora added. "They are continuing to monitor the European financial crisis, as well as the debt battle in Congress. National and international issues impact big banks more than smaller lenders."

Month 2011 Big Bank ($10B+ assets)
Approval %
Small Bank
Approval %
Credit Union
Approval %
Alternative Lenders
Approval %

January

12.8%

43.5%

48.9%

49.3%

February

11.9%

43.9%

49.1%

51.6%

March

11.6%

44.2%

48.8%

51.9%

April

10.4%

44.6%

50.1%

53.6%

May

9.8%

45.0%

51.2%

53.8%

June

8.9%

42.5%

52.3%

54.9%

July

9.8%

44.9%

53.4%

52.2%

August

9.4%

43.8%

54.2%

58.0%

September

9.2%

45.1%

55.5%

61.5%

October

9.3%

46.3%

56.6%

61.8%

November

10.0%

47.0%

57.0%

62.0%

December

9.7%

47.1%

57.4%

62.2%

* Banks with more than $10 billion in assets are classified as "big banks."
* Credit Unions are considered "alternative lenders."
* The "alternative lenders" category includes credit unions, Community Development Financial Institutions (CDFI), micro lenders, accounts receivable financers, and others

"The biggest story in small business lending is the aggressiveness of alternative lenders and continued flip flops on part of big banks in their lending policies to small businesses," Arora added.

"Further, we have noticed an increase in startups looking for funding. Startups have an easier time securing capital from smaller banks and alternative lenders. Bigger banks are more stringent and usually seek to fund only businesses that can produce documentation that they have been operating for more than two years. Obviously, a startup cannot do that. So entrepreneurs are going elsewhere for money."

Biz2Credit's analysis also found that loan request amounts ranged from $25,000 to $3 million; that the average credit score was above 680, and that average-time-in-business was slightly more than two years.

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.

About the Biz2Credit Small Business Lending Index

The Biz2Credit Small Business Lending Index differs from other indices by analyzing requiredinformation (primary data) submitted by small business owners applying for financing through Biz2Credit's online platform, which connects borrowers with more than 450 lenders nationwide.

About Biz2Credit

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers, and complimentary 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, 450+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Having secured more than $500 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 credit resource for small businesses.

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