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August/2022

Biz2Credit Small Business Lending Index™ Finds Business Loan Approval Dipped at Big Banks in August 2022

Loan approval percentages down slightly at big banks and credit unions, but small banks and non-bank lenders show continued growth
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Big BanksImage
Banks with assets greater than $10 billion
Small business loan approval percentages at big banks ($10b+ in assets) dipped from 15.3% in July to 15.1% in August.

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.

Monthly Comparison
-0.2%
15.1%
August 2022
15.3%
July 2022
Yearly Comparison
+1.2%
15.1%
August 2022
13.9%
August 2021
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“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.”

Rohit Arora
Biz2Credit CEO
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Small Banks Image
Banks with assets less than $10 billion
Small banks’ approvals also rose from 21.2% in July to 21.4% in August. According to the latest Biz2Credit Small Business Lending Index™ released today.
Monthly Comparison
+0.2%
21.4%
August 2022
21.2%
July 2022
Yearly Comparison
+2.1%
21.4%
August 2022
19.3%
August 2021
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“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.

Rohit Arora
Biz2Credit CEO
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Institutional Lenders Image
Investment groups or large investment portfolios such as insurance funds, mutual funds and hedge funds
Institutional lenders approved 25.9% of loan requests in August, a slight increase from 25.8% in July. Approvals in this lending category have climbed consistently in 2022.
Monthly Comparison
+0.1%
25.9%
August 2022
25.8%
July 2022
Yearly Comparison
+1.6%
25.9%
August 2022
24.3%
August 2021
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Alternative Lenders Image
Independent lending organizations not licensed as banks or credit unions
Alternative lenders’ approval rates rose from 27.2% in July to 27.3% in August.
Monthly Comparison
+0.1%
27.3%
August 2022
27.2%
July 2022
Yearly Comparison
+2.1%
27.3%
August 2022
25.2%
August 2021
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“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.”

Rohit Arora
Biz2Credit CEO
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Credit Unions Image
Arora says the lending industry is watching closely what the SBA does, specifically whether the agency will approve fintech companies to process SBA loans.
Credit unions once again dropped from 20.4% in July to 20.3% in August.
Monthly Comparison
-0.1%
20.3%
August 2022
20.4%
July 2022
Yearly Comparison
-0.2%
20.3%
August 2022
20.5%
August 2021

The Report

About Biz2Credit Small Business Lending Index™

The Biz2Credit Small Business Lending Index™ 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 Index™ 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.

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