Lending Approval Rates at Big Banks, Institutional Lenders Continue to Surge, According to February 2015 Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend

Loan Approval Percentages at Small Banks, Alternative Lenders and Credit Unions Continue to Decline

Small business loan approval rates at big banks and institutional lenders continue to improve, attaining new post-recession highs in February 2015, according to the Biz2Credit Small Business Lending Index, the monthly analysis of 1,000 loan applications on Biz2Credit.com.

Big Banks

Big Banks

Big banks ($10 billion+ in assets) approved 21.5% of small business loan requests in February 2015, up from 21.3% in January. Further, loan approval rates at big banks have increased consistently for 10 out of the last 11 months, and a year-to-year comparison shows that they have increased by 12.5%.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"Big banks are starting to grant more conventional loans. This allows them to keep fixed loan expenses down compared to SBA-backed loans, which are not primarily being done at smaller banks."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"The investment in digitization at big banks has helped expedite the small business loan approval process."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

For the fourth consecutive month, small banks denied more than half of their loan requests to small business owners, as lending approval rates at small banks remained stagnant at 49.6% in February. After reaching an all-time Index high in May 2014, lending approval rates at small banks have gradually declined.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"Smaller banks are better at offering SBA loans, but those loans take time to process. Creditworthy customers who seek quick funding are turning to other types of funding that take less time to process". "This leaves smaller banks with less attractive borrowers than they had a year ago and explains why approval percentages are dropping."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Meanwhile, institutional lenders granted 60.7% of funding requests by small business owners in February, an increase from 60.5% in January 2015. Approval rates by institutional lenders have increased each month ever since Biz2Credit began monitoring this category of lenders one year ago.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Institutional lenders are willing to offer more loans that are financially appealing to small business owners". "The high approval rate in this category of lenders is a reflection of their strong investment in technology advancements, which enables them to quickly assess the risk of default. Thus, they are incredibly efficient; only a miniscule 0.77 percent of loans made by institutional lenders on our platform have defaulted."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Approval rates at alternative lenders -- merchant cash advance companies, factors, and other non-bank institutions - dropped for the 13th consecutive month to 61.4% in February, from 61.6% in January. Their drop has coincided with the emergence of institutional lenders.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Alternative lenders have been impacted most by the emergence of institutional players. As the economy continues to improve, small businesses with good credit standing don't have to borrow money at high interest rates often associated with alternative lenders". "Small business owners were often obligated to pay high interest rates during the 'credit crunch' when they were desperate for money. However, this is no longer the case."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions granted 43.3% of loan applications in January, a slight increase from the record low approval rate of 43.2% in January 2015. However, they are still struggling to increase their presence in the small business finance marketplace.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

View Past Months

Access Archives

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
June 2019

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

Big Banks, Regional and Community Banks, and Institutional Lenders Climb, While Alternative Lending Drops and Credit Unions Sink to New Low

View Report
May 2019

Small Business Loan Approvals at Big Banks Stay at Record Post-Recession High, According to May 2019 Biz2Credit Small Business Lending IndexTM

Small Banks and Institutional Lenders Climb, Credit Union Lending Remains at Post-Recession Low, Alternative Lending Stalls Again

View Report
April 2019

Small Business Loan Approvals at Banks Jumped Again in April Biz2Credit Small Business Lending IndexTM

Credit Union Lending Remains at Post-Recession 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.