Small Biz Loan Approval Rates Reach New Heights at Big Banks and Institutional Lenders as 2016 Ends, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend

Alternative Lenders and Credit Unions Continue to Falter

Loan approval rates at big banks ($10 billion+ in assets) and institutional lenders finished the year strong, improving to post-recession highs in December 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. Small banks also saw an increase in the approval rates of funding requests last month. However, alternative lenders and credit unions continued their downward spiral in loan approval rates, a disconcerting trend that spans over two years.

Big Banks

Big Banks

Small business loan approval rates at big banks jumped to 23.9% in December, up two-tenths of a percent from November. It marked the fifth consecutive month of increases for this category of lenders. Further, loan approval rates at big banks in 2016 increased by one full percentage point in a year-to-year comparison.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"The combination of an improving economy and the expected deregulation of the financial sector when Donald Trump takes office has provided banks with optimism. This has resulted in higher loan approval rates in recent months."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"After a slow start to the year, banks aggressively worked on closing deals to bump up their end-of-the-year targets."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Additionally, approval percentages at small banks improved to 48.9% last month, up one-tenth of a percent from November. Loan approval rates throughout the year had been relatively stagnant, but there are some encouraging signs for 2017.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"Perhaps the biggest benefactors in the upcoming Trump Administration are small banks, which have been held back by regulations under Obama", one of the nation's leading experts in small business finance. "Reduced regulation will allow community lenders to approve loans more naturally."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders extended their surge in loan approval rates for the sixth consecutive month as approvals of funding requests improved to 63.4% in December 2016. This marks a new Index high.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"The expectations are that the corporate tax rate will be reduced in the near future. This will result in more requests for investment". "I expect global investors who seek to high yields on investments will become increasingly active among the institutional lenders making small business loans." Arora believes the election of Donald Trump will positively impact lending markets. The President-elect has pledged to repeal Dodd-Frank, which brought of bevy of regulations to the banking sector since it was signed into law. "If Dodd-Frank is scaled back, small banks could be the biggest beneficiaries".

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Loan approval rates dropped significantly at alternative lenders in December, as they approved only 58.6% of the funding requests they received, down six-tenths of a percent in a month-to-month comparison.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"The demise of CAN Capital, one of the most largest players in alternative lending, has shaken up the category". "CAN Capital is not currently lending, and other, smaller alternative lending companies are going out of business. They simply cannot compete in the market." "As banks and institutional investors continue to invest in technology to streamline lending, alternative lenders are losing their competitive advantage, which allowed them to charge borrowers higher interest rates," Arora added. "We will see more consolidation in this space in 2017."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Loan approval rates at credit unions dropped to a new Index low of 40.9% in December.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"As credit unions continue to falter, they are becoming something of a forgotten option for small business borrowers". "The loan approval process has evolved considerably in the last few years, and credit unions have not done enough to keep up with the times. Borrowers opting for loans at other types of lenders."

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

October 2019

Big Banks’ Small Business Loan Approvals Hit New Record in October, According to Biz2Credit Small Business Lending Index™

Strength seen in lending by big banks, small banks, and institutional investors last month

View Report
September 2019

Small Business Loan Approvals at Big Banks Hit New Record in September, According to Biz2Credit Small Business Lending Index™

View Report
Aug 2019

Small Business Loan Approvals at Banks Continue to Reach New Heights, According to August 2019 Biz2Credit Small Business Lending Index™

View Report
July 2019

Small Business Loan Approvals at Banks Hit Record Highs, According to July 2019 Biz2Credit Small Business Lending IndexTM

Alternative Lending Drops and Credit Unions Sink to a Record Low

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.