Biz2Credit Small Business Lending Index Reports Jump in Lending Approvals at Big Banks for April 2013
Monthly Index Reports All-Time Index High in Approval Rates by Big and Small Banks; Credit Unions Continue to Slump
NEW YORK, NY, May 9, 2013-Small business loan approval rates improved to an all-time index high of 16.8% at big banks, according to the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com. Lending approvals at big banks bounced back in April after experiencing a minor setback in March when approval ratings were at 15.7%. More importantly, in a year-to-year comparison approvals at big banks are up over 50 percent.
“Big banks such as td Bank, Sovereign and Wells Fargo are investing heavily in new technology to increase speed and service of approvals,” said Biz2Credit CEO Rohit Arora, who oversaw the research. "As the economy continues to rebound, lending conditions are gradually improving. Higher credit-quality customers are electing to apply to loans from big banks first, now that they are willing to lend and the service has improved.”
Meanwhile, lending approvals at small banks increased for the fifth consecutive month, again reaching a new all-time index high of 50.9%. This rate shows a slight increase from the 50.8% figure in March2013. However, a year-to-year comparison indicates over a 10 percent increase in approvals from the April 2012 figures.
“Small banks continue to be an aggressive player in small business lending, but must maintain focus on advancements in technology to remain competitive in lending or the big banks will take over,” said Arora, one of the nation's leading experts in small business finance. “Big banks possess the element of brand recognition and can generally offer better rates than small banks, so it is essential small banks offer an advantage and continue to process loans quicker.”
Credit union approvals of small business loans continued to plummet, dropping to 45.2%, from 45.5%in March 2013. There is no indication that this trend will reverse soon. Further, loan approval rates sit at an all-time Index low for credit unions.
“The return of big banks to the small business credit market does not bode well for credit unions. For the credit unions," Arora added. "In order to bounce back in small business lending, they must improve their technology and expedite the loan-making process.”
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