Small Biz Loan Approval Rates Rebound at Big Banks, Institutional Lenders in August 2016, According to Biz2Credit Small Business Lending Index
Small banks and Alternative Lenders Experience Setbacks
Loan approval rates at big banks ($10 billion+ in assets) bounced back in August 2016, according to the most recent Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Further, approval percentages at institutional lenders hit a new Index high. Meanwhile, approval rates at small banks and alternative lenders and credit unions stalled.
Big Banks
Small business loan approval rates at big banks improved to 23.3% in August, up two-tenths of a percent from July's figure. It was the sixth time in the last seven months that lending approval rates improved among big banks. In a year-to-year comparison, big banks are approving funding requests a full percentage point higher than they were in August 2015.
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" Big banks anticipated that the Federal Reserve would raise interest rates this summer."
Rohit Arora, Biz2Credit CEO
"Now, a rate hike seems to be on hold indefinitely, and the banks find themselves behind in their target goals. Now, they are aggressively seeking to close more deals."
Rohit Arora, Biz2Credit CEO
Small Banks
Meanwhile, lending approval rates dropped slightly at small banks to 48.8% last month.
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"Small banks are increasingly becoming more digitally savvy, but not enough of them are making it a top focus". "Right now, money can be borrowed cheaply. Conventional rates are lower than SBA loans, which is a popular loan product that small banks utilize."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders' loan approval rates improved to an all-time high of 62.9% in August 2016. For the first time since February 2016, institutional lenders had consecutive months of increases in loan approval rates.
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"The gradual ascent of institutional lenders is related to the attractive terms and the speed by which this category of lender can offer funding", one of the nation's leading experts on small business finance. "High yields and low default rates enables this category of lenders to approve a high percentage of loan requests."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Alternative lenders experienced a decrease in loan approval rates in August, approving 59.9% of loan requests. It is the first time in five years (August 2011) that this category of lenders is approving less than three-in-five loan requests. Further, it is the fifth time in the last six months that loan approval rates have declined.
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"Alternative lenders filled the void for small business lending during the Credit Crunch, but since then have steadily lost favor because borrowers no longer have to borrow at any cost and other categories of lenders are simply offering more attractive terms". "As the economy continues to improve, so does the competitiveness in the small business finance marketplace. Alternative lenders lost their advantage of speed because other lenders invested into digitization and expediting loan requests."
Rohit Arora, Biz2Credit CEO
Credit unions
Loan approval rates at credit unions were stagnant in August, and remain at an all-time Index low of 41.5%. However, it was the first time that loan approval rates didn't drop in this category of lenders in over a year.
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"Credit unions continue to lag behind in the times and are becoming almost irrelevant when it comes to small business loans". "They're being overtaken by other categories of lenders and until they modernize, credit unions will continue to stagnant in small business lending."
Rohit Arora, Biz2Credit CEO
View Past Months
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| December 2020 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Declined in December 2020, Are Down More Than 50 Percent from One Year Ago |
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Approval percentages for all categories of lenders dropped more than 50% from December 2019 |
| View Report |
| November 2020 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Declined in November 2020, Are Down More Than 50 Percent from One Year Ago |
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Approval percentages are down 50% or more for all categories of small business lenders as the pandemic surges |
| View Report |
| October 2020 |
Small Business Loan Approval Rates at Banks Declined in October 2020: Biz2Credit Small Business Lending Index™ |
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Small Businesses Capital Is Hard to Secure |
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| September 2020 |
Small Business Loan Approval Rates at Banks Fell Again in September 2020: Biz2Credit Small Business Lending Index™ |
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Small Businesses in Limbo Awaiting PPP Loan Forgiveness |
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About Biz2Credit Small Business Lending IndexTM
The Biz2Credit Small Business Lending IndexTM is an analysis of 1,000 monthly loan applications on the Biz2Credit website. The Index reports the loan approval rates of small business financing requests at Big Banks ($10 billion+ in assets), local and regional banks and non-bank lenders (credit unions, Community Development Financial Institutions (CDFI), micro lenders, and others).
Unlike other surveys, the results are based on primary data submitted by more than 1,000 entrepreneurs who applied for funding on Biz2Credit's online lending platform, which connects small business borrowers with sources of capital.
Results of the Biz2Credit Small Business Lending IndexTM have been reported by The Wall Street Journal, Bloomberg BusinessWeek, Entrepreneur.com, Bloomberg Radio's "The Hays Advantage", SBA Radio, NY Daily News, Crain's NY Business, Michigan Banker, and other media.