X
X
Follow us on
pinterest
X

  Login/Register with

CALL TOLL FREE800-200-5678
See how we help you get your dream loan

See how we help you get your dream loan

With help of more than 1,300 lender partners

Quick Connect

800-200-5678

Follow us on

Biz2Credit Small Business Lending Index for August 2012 Reports Drops in Approvals by Big Banks and Credit Unions; Increases at Small Banks and Alternative Lenders

Monthly Analysis Finds Mixed Results for Small Companies Pursuing Capital

NEW YORK, NY, September 12, 2012 – In a month where the overall volume of loan applications increased by 4.3%, the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2credit.com, revealed that approval rates increased at small banks and alternative lenders, while big banks and credit union approvals dropped in August 2012.

The Index found that 10.9%.of funding requests were approved by big banks ($10B+ in assets) in August -- a drop from 11.3% in July 2012.  This figure represents a setback, as big banks had experienced an upswing in approvals during the previous two months.  However, small bank lending approvals increased in August to 47.8% from 47.4% in July.  The figure represents the highest approval rating percentage for small banks since Biz2Credit began the Index in 2011.

"The issue with big banks is a combination of global credit issues and regulatory pressure to keep their underwriting standards tight so that they can meet their underlying capital ratios,” said Rohit Arora, Biz2Credit co-founder and CEO, who oversaw the research.  "The SBA lending program being pushed by small banks has increased their approval rates."

The loan approval rate of credit unions dipped for a third consecutive month in August to 52.9%, the lowest percentage since June 2011.  The slowdown in loan approval is partially caused by a reported ‘lending cap out’ by many credit unions, which may only lend 12.25% of their assets to small businesses.

Even as credit union lending dropped, alternative lenders -- accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others –rose.  In August 2012, alternative lenders approved 64.5% of loan requests, up from 64.1% in July and 6.5% higher than August 2011 approvals.  The 64.5% approval rate was the highest recorded since the Biz2Credit Small Business Lending Index began.

“While credit union approvals have dipped over the last three months, alternative lenders recorded their highest approval rates since we began measuring the category.  They are offering new products at cheaper pricing, which has helped to increase lending,” said Arora, one of the nation's leading experts in small business finance.  "In the case of credit unions, we are seeing the continued impact of the 12.25% MBL ceiling, as well as sluggishness in credit unions' willingness to book new business.

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

Aug. 2011

9.4%

43.8%

54.2%

58.0%

Sept. 2011

9.2%

45.1%

55.5%

61.5%

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%

  • 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.

"As the Presidential election draws near, both parties will be looking at unemployment figures and small business growth as key issues.  Mitt Romney and President Obama both want to be seen as the best person to help small businesses expand," Arora added.  “Many businesses are seeking short-term working capital to prepare for the upcoming holiday season.  In August, the best places to get it were small banks and alternative lenders.”

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 $700 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.

SUBSCRIBE TO OUR MONTHLY NEWSLETTER
Join 250,000+ subscribers to receive the latest offers and updates from Biz2Credit.