Small Business Loan Approvals at Banks Continue to Reach New Heights, According to August 2019 Biz2Credit Small Business Lending Index™
Biz2Credit Small Business Leading IndexTM
Small Business Loan Approvals at Banks Continue to Reach New Heights
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Big Banks
Approval rates for small business loan applications rose to another post-recession record (27.8%) at big banks ($10 billion+ in assets), while approval percentages also climbed above 50% at small banks in August
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“Small business lending is as strong as ever at big banks and at regional and community banks. It appears that 2019 will likely be the best year in history for entrepreneurs in need of financing, so long as they have a solid credit history when they apply,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research derived from more than 1,000 small business credit applications on his company’s online lending platform.
Rohit Arora, Biz2Credit CEO
Small Banks
Small bank approvals of small business loan applications inched up two-tenths of a percent to 50.3% in August from 50.1% in July. “SBA Loans spur small business lending. The government guarantees on the loans make them very attractive for regional and community banks,” Arora explained. “It’s a very positive sign that approval rates continue to climb above the 50% benchmark.” Meanwhile, the Labor Department’s Jobs Report released on September 6, reported that nonfarm payroll employment rose by 130,000 in August, and the unemployment rate was unchanged at 3.7 percent. The U.S. Bureau of Labor Statistics noted that significant job gains occurred in health care and finance. Additionally, the Federal Reserve is said to be discussing another interest rate cut that could result in another one-quarter point drop in the cost of capital. The Fed’s next policy meeting is scheduled for September 17-18.
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“Interest rates are attractive as it is now. If someone has been sitting on the fence waiting for a more attractive rate, this could be it, but we won’t know until after the Fed meets. It’s not an absolute certainty that they will approve the cut,” Arora said.
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders’ approval rates rose one-tenth of a percent to 65.8% from July’s figure of 65.7%.
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“Institutional lenders are playing an increasingly important role in small business financing,” Arora said.
Rohit Arora, Biz2Credit CEO
Alternative lenders
Small business loan approval rates among alternative lenders dropped two-tenths of a percent to 56.6% from 56.8% in July. A recent Biz2Credity study of small business categorized by industry found that restaurants and retail ventures, generally considered as riskier propositions, are finding success through non-bank lenders.
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“Bank lending to small businesses has steadily grown, and this impacts alternative lenders, who typically strike deals with companies that banks have rejected,” Arora said.
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions climbed back up to the 40% mark in August, after slipping to 39.8%, which was a record low for since Biz2Credit began analyzing small business loan approval percentages in 2011.
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“The Member Business Lending cap (12.25% of their assets), the aggressiveness of banks and alternative lenders, and the inability of many credit unions to process online loan applications has significantly hindered credit union lending to small businesses,” said Arora, who oversees the Biz2Credit research.
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 |
| View Report |
| 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 |
| 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.