Banks’ lending to small business has started to grow again as per Biz2credit Lending Index despite all negative vibes that surround the small business sector. There is talk everywhere about the slowing down of economic growth, reduced spending, less stimulus packages and so on. But, Biz2credit in its monthly analysis found the reverse happening.
In monthly analysis of 1,000 loan applications for the month of June, Biz2credit found that big banks’ loan approval rate jumped from 10.6% to 11.1%. Big banks remained inactive due to tremendous pressure that it faced during and after the recession. But they have started to open up now to small businesses and are closing more deals than before.
Small bank lending increased to 47.5% in June 2012, which is up from 45.5% in May 2012. Local banks are certainly making SBA 7 (a) Express Loans and small business lending phenomena have picked up. But the June report also found that credit union’s approval rate fell 55.8% that is down from the earlier 57.6%. The current lending limit of credit unions is 12.25% of its total assets.
‘Credit Union Small Business Jobs Bill’ has been introduced by Senator Mark Udall and it is meant to raise credit union lending cap to 27.5 % from current figure of 12.25%. The number of small business loans can increase due to raising of the cap. Credit unions have become very active this year and have started to increase small business loans to business owners.
As banks are lending now, so small businesses are less likely to search for other alternative options. On finding access to capital, small companies can expand operations and also help in creating new jobs for the economy.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to firstname.lastname@example.org