Small Business Loan Approval Rates at Big Banks Remain at Record High in February 2020: Biz2Credit Small Business Lending Index™
Small Banks and Alternative Lenders drop, and Credit Unions remain at all-time low
Biz2Credit Small Business Leading IndexTM
Small Business Loan Approval Rates at Big Banks Remain at Record High in February 2020:
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Big Banks
The approval percentage for small business loan applications at big banks ($10 billion+ in assets) stayed flat at 28.3% in February 2020, which remains post-recession record high, according to the Biz2Credit Small Business Lending Index™ released today.
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“Despite the Coronavirus scare during the month of February, small business lending was solid during the month,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “We are likely to see the fallout from the spread of the virus in next month’s figures. Until very recently, the economy was chugging right along.”
Rohit Arora, Biz2Credit CEO
Small Banks
The approval rate at small banks dipped one-tenth of a percent from 50.4% in January to 50.3% in February. According to the Bureau of Labor Statistics’ Jobs Report, nonfarm employment rose by 273,000 in February, while the unemployment rate was little changed at 3.5% last month. Notable job gains occurred in health care and social assistance, food services and drinking places, government, construction, professional and technical services, and financial activities. “February’s employment figures were better than expected. However, with the havoc caused by the Coronavirus, I suspect that the March figures will not be as rosy,” said Arora, one of the country’s leading experts in small business finance.
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“As was the case in January, smaller banks are down slightly because they process more SBA loans, and the banks that make them want to see 2019 tax returns before making lending decisions,” Arora said.
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders’ approval rates rose one-tenth of a percent from January’s figure of 66.4% to 66.5% in February 2020.
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“Institutional lenders continue to gain strength in small business lending. With attractive interest rates and longer terms than most other non-bank lenders, they are a fine source of capital for small businesses,” Arora said.
Rohit Arora, Biz2Credit CEO
Alternative lenders
Small business loan approval rates among alternative lenders dipped from 56.1% in January to 55.9% in February 2020.
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“Alternative lenders offer financing to businesses that banks often turn away,” Arora said. “For companies with mediocre or poor credit histories, they are a willing lender, which can be hard to find since such a high emphasis is placed on credit scores by traditional bank lenders.”
Rohit Arora, Biz2Credit CEO
Credit unions
The approval percentage rate for credit unions remained at a record low of 39.6% in February.
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“I don’t see much movement from credit unions, which continue to struggle in the business credit marketplace. Those that do not upgrade their digital capabilities or partner with FinTech firms cannot expect to see their fortunes improve in today’s lending marketplace,” Arora said.
Rohit Arora, Biz2Credit CEO
View Past Months
Access Archives
| February 2021 |
Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates in February 2021 Changed Little from January, But Dropped Dramatically from February 2020 |
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As Small Business Businesses Apply for PPP Funding, Approval Percentages for Traditional Loans Plummet |
| View Report |
| January 2021 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Increased Slightly in January 2021, But Are Down More Than 50% from One Year Ago |
| View Report |
| 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 |
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.