Biz2Credit Small Business Lending Index™ Finds Business Loan Approval Dipped at Big Banks in August 2022
Total nonfarm payroll employment increased by 315,000 in August, and the unemployment rate rose to 3.7 percent, according to the Jobs Report released by the U.S. Bureau of Labor Statistics released on Friday, September 2, 2022. Notable job gains occurred in professional and business services, health care, and retail trade. Many of these jobs are created by small businesses.
Thirty-seven percent of small business owners reported that inflation was their single most important problem in operating their business, an increase of three points from June and the highest level since the fourth quarter of 1979, according to the latest NFIB Small Business Optimism Index (Aug 9, 2022).
Biz2Credit analyzed loan requests from companies in business more than two years with credit scores above 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's platform. To view the report for August 2022, click here.
“The overall conditions are tightening, and big banks are taking more provisions now,” said Rohit Arora, Biz2Credit CEO and co-founder, and one of the nation’s leading experts in small business lending and fintech. “Since smaller banks are more active in SBA lending, their approval rates are still strong as demand for government-guaranteed products is high.”
“Inflation is hitting small businesses hard as their input costs have gone up thus they need more working capital. Further, labor shortages have led to companies having to do more with less. Since their automation level is lower than big businesses, higher labor and material costs impact small companies more,” Arora added.
“Another cause for concern is that consumer spending is going more towards essential products and services, rather than luxuries and travel,” Arora said. “So, I expect further drop in lending approvals going into fall.”