Small Biz Lending Approval Rates Surge at Big Banks, Institutional Investors: Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Lending at Alternative Lenders Continues to Falter; Credit Union Loan Approval Rates Remain Stagnant
Loan approval rates at big banks ($10 billion+ in assets) improved to new post-recession highs in February 2017, according to the latest Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend,the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Small banks and institutional investors also experienced an uptick in their loan approval rates in an overall favorable month for small business lending. Meanwhile, loan approval rates at credit unions remained stagnant and approval rates at alternative lenders dropped.
Big Banks
Small business loan approval rates at big banks improved to 24.1% in February 2017, marking the seventh consecutive month of increases and the 11th time in a calendar year that approval percentages have increased. Further, loan approval rates at big banks in a year-to-year comparison are up more than one full percentage point, as they slowly creep towards the one-quarter mark.
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"There is a confidence in the economy right now, and that is translating to higher loan approval rates at mainstream lending institutions."
Rohit Arora, Biz2Credit CEO
"Small business owners are optimistic that there are bright days ahead and are applying for capital to invest in growing their businesses."
Rohit Arora, Biz2Credit CEO
Small Banks
For the first time in the last six months, loan approval rates at small banks dropped by one-tenth of a percent to 48.8% in February 2017 from 48.9% in January. The approval rates at small banks dropped below 50% two and a half years ago and have struggled to reach the mark again.
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"Although small banks dipped slightly in their loan approval percentage last month, there is some room for optimism", one of the nation's leading experts in small business finance. "President Trump has prioritized reforming the Dodd Frank legislature to scale back regulations for community banking institutions. His administration is aggressively working towards reducing the burdensome bill to small banks, which will allow them to lend more freely."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders' loan approval rates improved to 63.5%, reaching a new Index high. It was the second time in the last three months that this category of lenders had an uptick in their loan approval rates.
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"The stock market and U.S. dollar are very strong and this is attracting a high volume of investors from various parts of the world". "Small business lending is still one of the most profitable sectors to invest in and we are seeing a number of yield-hungry investors getting involved in this space of loans."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates dropped at alternative lenders in February, as they approved 58.4% of the loan requests they received, down one-tenth of a percent from 58.5% in January.
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"Alternative lenders have struggled to adjust to its industry competition, which have caught up to the one advantage they once held - speed of processing loan requests". "The advancements in technology at big banks and institutional lenders have led to quicker, more efficient loan approvals. Investments in technology enable these big lending institutions to offer affordable loan products as they significantly mitigate risk."
Rohit Arora, Biz2Credit CEO
Credit unions
Loan approval rates at credit unions remained stagnant at 40.8%, the low mark for this category of lenders.
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"Credit unions have become an afterthought for small business borrowers". "Competitors are taking market share away from credit unions, which are frequently left with less creditworthy borrowers."
Rohit Arora, Biz2Credit CEO
View Past Months
Access Archives
| February 2020 |
Small Business Loan Approval Rates at Big Banks Remain at Record High in February 2020: Biz2Credit Small Business Lending Index™ |
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Small Banks and Alternative Lenders drop, and Credit Unions remain at all-time low |
| View Report |
| January 2020 |
Small Business Loan Approval Rates at Big Banks Reach New Record in January 2020: Biz2Credit Small Business Lending Index™ |
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Small banks drop slightly, while Credit Unions hit new bottom |
| View Report |
| December 2019 |
Banks’ Small Business Loan Approval Rates Hit Record High in December 2019: Biz2Credit Small Business Lending Index™ |
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Improvement seen at big banks, small banks, and institutional investors |
| View Report |
| November 2019 |
Big Banks’ Small Business Loan Approvals Continue to Rise, Reach New Record High in November, According to Biz2Credit Small Business Lending Index™ |
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Improvement seen in lending by big banks, small banks, and institutional investors in November |
| 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.