Bank Lending to Small Companies Improved Dramatically in Feb. 2014; Biz2Credit Small Business Lending Index Reports Record High Loan Approval Rates at Banks
Credit Unions and Alternative Lenders Experience Decrease in Approvals as Banks Grant Increasing Numbers of Non-SBA Loans
Big Banks
Small business loan approval rates at big banks ($10 billion+ in assets) jumped to 19.1% in February 2014, up from 17.8% in January, according to the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com. In a year-to-year comparison, lending approval rates at big banks have increased more than 20 percent.
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"We continue to see that big banks are increasing their approvals of both SBA and non-SBA loans."
Rohit Arora, Biz2Credit CEO
"Confidence in the economy and winter-stressed financials have encouraged businesses to be more bullish on applying for funds to invest in their companies."
Rohit Arora, Biz2Credit CEO
Small Banks
ahrefstartSmall business loan approvalsahrefend at small banks increased to 51.4% in February 2014, up from 50.9% in the previous month.
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"Banks are starting to recognize the value of technology, especially with the online adoption of loan seekers." "They closed a lot of SBA loans in February."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional Lenders approved 56.6% of the funding requests they received in February, a slight increase from 56.5% in January, the first month that this category of the Biz2Credit Small Business Lending Index was measured. This category of lenders includes credit funds, insurance companies, family funds, and other yield-hungry, non-bank financial institutions that typically offer more competitively priced loan options than alternative lenders in amounts up to $1 million.
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"Institutional investors aggressively pursuing small business lending deals. They offer interest rates generally between the rates offered by banks (in the 6-8% range) and alternative lenders, which can charge 20-50%". "Pricing pressure on alternative lending has increased and fewer businesses are inclined to take high cost cash advances."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Alternative lenders had a slight decrease in approval rates to 63.9% in February from 64.1% in January 2014. Alternative lenders, which had been the biggest benefac"Small business loan approvalstors of the government shutdown last October, are starting to feel some competition from institutional lenders.
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"Pricing pressure on alternative lending has increased, and fewer businesses are inclined to take high cost cash advances". "Some business owners don't realize how high the interest rates are from alternative lenders when they first secure the funding. If and when they can, small business owners pursue traditional bank loans at lower rates. This leaves the alternative lenders with poorer quality loan applicants, which is why their approval rates have declined."
Rohit Arora, Biz2Credit CEO
Credit unions
Meanwhile, credit unions continue their slide in lending approvals. In February, small business loan approval rates at credit unions dipped from 43.4% in January to 43.3%, the lowest figure in since the Biz2Credit Index began at the start of 2011. Additionally, lending approval rates by credit unions has declined in 17 of the last 21 months and is down by nearly 25 percent during that period.
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View Past Months
Access Archives
| 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.