Boom in Technology and Ecommerce Spark Small Business Loan Approval Percentages in February 2018, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend

Commercial loans spur strong month as small business loan approvals hit post-recession heights

ahrefstartbusiness loanahrefend approval rates for big banks (25.4%) hit another new high last month, according to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend (February 2018 figures) released today. The monthly analysis examined more than 1,000 credit applications from small businesses on Biz2Credit.com.

Big Banks

Big Banks

Big banks (assets of $10 billion+) are granting more than one-quarter of the small business loan applications they receive. The 25.4% approval percentage, up one-tenth of a percent from January 2018, represents another new benchmark for big banks.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"There is a lot of demand to fund commercial real estate. While mall construction has essentially halted, ecommerce has caused a boom in the construction of warehouses and other industrial buildings,"

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy
"The prime rate has gone up, and commercial loans and SBA loans are variable rate loans. Thus, it has become profitable for banks to lend," Arora adds. "Banks are lending at 7 percent now, and with the Fed expected to raise rates again, the rates may go to 8 percent. Meanwhile, the cost of capital hasn't gone up much, so spreads are going up, and the banks have more incentive to close loans."

"Banks weren't lending to commercial, but now commercial loans are really picking up. There was relatively little construction of industrial buildings in the last 8-9 years."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Small business loan approval rates climbed slightly at regional and community banks. Small banks approved 49.2% of the funding requests they received in February, up one-tenth from the month prior. Many of the loans processed by small banks are SBA loans.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"The SBA made changes, and down payments for commercial real estate went down from 20 percent to 10 percent. That has spurred SBA lending," explained Arora, one of the nation's leading experts in small business finance." "Another factor is that SBA loan defaults are less than one percent. Meanwhile, the SBA's 75 percent guarantee is still in place. Arora says small banks are also selling the loans on the secondary market, which also adds to their profits.

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

institutional lenders reached a new Index record 64.4%, up one-tenth from January. These lenders (pension funds, insurance companies, and others), continue to be important players in small business lending.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Institutional investors are a reliable source for small business lending," Arora said. "They offer interest rates and terms that make them very competitive with banks."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Loan approval rates among alternative lenders remained at 56.6%. Approvals have dipped slowly each month for almost two years, except for a small uptick in November 2017.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Alternative (non-bank) lenders remain a source of funding for businesses that have bad credit histories or that need money in a hurry," Arora explained. "If you have less than stellar creditworthiness, an alternative lender may be the best - and sometimes the only - option."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions approved 40.2% of loan applications in February, a one-tenth of a percent drop from January and a new record low for the Biz2Credit Small Business Lending Index.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"Credit union lending to small businesses has stalled, and competitors that have invested financial technology clearly have an advantage". "I expect this trend to continue unless credit unions more fully embrace FinTech."

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

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
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

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.