Bank Loan Approval Rates Continued to Climb in August 2017, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Big banks grant nearly one-in-four funding requests, while small banks approve almost half of applications they receive from small business borrowers
Loan approval rates at big banks ($10 billion-plus in assets) hit another post-recession high in August 2017, according to the latest Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend , the monthly analysis of more than 1,000 small business loan applications on ahrefstartBiz2Credit.comahrefend. Loan approval percentages of institutional investors also set a new record..
Big Banks
Small business loan approval rates at big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index.
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"It's a good time for bank lending; the big banks are approving nearly a quarter of the loan requests they receive from small businesses while the smaller banks are granting almost half of the funding applications they receive."
Rohit Arora, Biz2Credit CEO
Small Banks
Loan approval percentages at small banks also rose one-tenth of a percent in August to 49.0% from July's 48.9% figure.
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"The economy is holding up well: the job market is strong, oil prices are still relatively low, and home values have gone up, which makes entrepreneurs feel more secure and confident."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders' loan approval rates in August remained at 63.9%, the all-time high for the Biz2Credit Small Business Lending Index.
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"The dollar is strong, and there is also hope that President Trump's promised tax cuts will pass and spur more economic growth," added Arora, one of the country's leading experts in small business finance. "With interest rates up a bit, it's profitable for lenders to close deals. Thus, bank lending is as strong as it has been the mid-2000s. Despite the daily drama in Washington, global growth has picked up, and the U.S. economy seems to be on solid footing."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates among alternative lenders continue to decline; approval rates dipped one-tenth of a percent in August to 57.1%. Approval percentages have dropped every month for more than a year.
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"Alternative lenders still are players in small business lending because they are willing to provide funding for borrowers who have less than stellar credit or little credit history at all," . "Since they accept higher risk by funding borrowers who do not have stellar credit histories, alternative lenders charge at a higher cost of capital."
Rohit Arora, Biz2Credit CEO
Credit unions
Loan approval rates at credit unions dipped a notch to 40.3% in August, thereby reaching a new low for this category of funders on Biz2Credit's index.
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"Credit unions continue to lose their relevance in small business lending because they have not invested in technology and are often slow in their deal-making,". "Further, the credit union member business-lending (MBL) cap has not risen above 12.25% of assets. This remains an ongoing issue."
Rohit Arora, Biz2Credit CEO
View Past Months
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| February 2021 |
Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates in February 2021 Changed Little from January, But Dropped Dramatically from February 2020 |
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As Small Business Businesses Apply for PPP Funding, Approval Percentages for Traditional Loans Plummet |
| View Report |
| January 2021 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Increased Slightly in January 2021, But Are Down More Than 50% from One Year Ago |
| View Report |
| 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 |
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.