Banks’ Small Business Loan Approval Rates Hit Record High in December 2019: Biz2Credit Small Business Lending Index™

Improvement seen at big banks, small banks, and institutional investors

Small business leading

Biz2Credit Small Business Leading IndexTM

Big Banks’ Small Business Loan Approvals Continue to Rise, Reach New Record High in December.

Big Banks

Big Banks

The approval percentage for small business loan applications at big banks ($10 billion+ in assets) rose one-tenth of a percent to reach 28.2% in December 2019, a new post-recession record high, according to the Biz2Credit Small Business Lending Index™ released today. Private sector, nonfarm employment increased by 145,000 in December, while the unemployment rate remained at 3.5%, according to the Bureau of Labor Statistics’ Jobs Report issued on Friday, Jan. 10. Notable job gains occurred in the retail trade during the holiday shopping season and in healthcare and food and hospitality. In 2019, payroll employment rose by 2.1 million jobs, according to the report.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

“A lot of businesses apply for funding at the end of the year since a time when companies are looking forward at their growth plans,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “Interest rates are low, thanks to cuts by the Fed, and the strong economy the climate is near perfect for small businesses to borrow for growth. If you have a solid business, banks have been willing to lend.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

The 2019 Fiscal Year was a great year for SBA lending, and Biz2Credit expects this trend to continue. The approval rate at small banks, which often are SBA-approved lenders, also climbed one-tenth of a percent from 50.5% in November to 50.6% in December.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

“Lending a regional and community banks is still strong. Smaller banks process a lot of SBA loans, which reached record levels in 2019,” Arora explained. “Regional and community banks cannot rest on their laurels, however. As big banks remain active and invest in digital loan application technology, the smaller banks either must develop their own systems.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders’ approval rates rose one-tenth percent from November’s figure to reach 66.2% last month.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

“Institutional lenders are a good source for small business funding. They offer financing at reasonable interest rates and are becoming an increasingly important source of capital for entrepreneurs,” Arora said.

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Small business loan approval rates among alternative lenders remained at 56.3% in December.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

“Alternative lenders are a consistent source of capital for companies that need money quickly or that don’t qualify for bank loans,” Arora said. “Alternative lenders can help companies during times of short-term cash crunches, but the interest rates they charge are higher than other lenders.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

The approval percentage rate for credit unions remained unchanged at 39.7% in December, tying the record low recorded in September 2019.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

“In order to survive today, credit unions need to change their business models, invest in technology or partner with FinTech firms so that they can process digital loan applications, and eliminate membership applications,” said Arora, who oversees the Biz2Credit research. “Credit unions are doing business in an old-fashioned way, and it hinders their relevance in today’s lending marketplace.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

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September 2020

Small Business Loan Approval Rates at Banks Fell Again in September 2020: Biz2Credit Small Business Lending Index™

Small Businesses in Limbo Awaiting PPP Loan Forgiveness

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August 2020

Small Business Loan Approval Rates at Banks Fell in August 2020: Biz2Credit Small Business Lending Index™

Slight Declines in Approval Percentages at Alternative Lenders and Credit Unions

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July 2020

Small Business Loan Approval Rates at Banks Rose in July 2020: Biz2Credit Small Business Lending Index™

Improvement in Approval Percentages at Banks and Institutional Lenders for Companies Applying for Non-PPP Loans, While Alternative Lenders and Credit Unions Slip

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June 2020

Small Business Loan Approval Rates Rebounded in June 2020: Biz2Credit Small Business Lending Index™

Improvement in Approvals for Companies Applying for Non-CARES Act Loans

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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.