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February / 2021

Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates in February 2021 Changed Little from January, But Dropped Dramatically from February 2020

As Small Business Businesses Apply for PPP Funding, Approval Percentages for Traditional Loans Plummet
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Big BanksImage
Banks with assets greater than $10 billion
Small business loan approval percentages at big banks ($10 billion+ in assets) rose slightly to 13.3% in February from 13.2% in January 2021, according to the latest Biz2Credit Small Business Lending Index™ released today.

In comparison, one year ago in February 2020, big banks approved 28.3% of the funding requests they received. The Bureau of Labor Statistics reported nonfarm payroll employment rose by 379,000 in February, and the unemployment rate was little changed at 6.2% in its Jobs Report issued Friday, March 5, 2021.

The labor market continued to reflect the impact of the coronavirus (COVID-19) pandemic. In February, most of the job gains occurred in leisure and hospitality, with smaller gains in temporary help services, health care and social assistance, retail trade, and manufacturing. Many of these jobs are created by small businesses.

Monthly Comparison
+0.1%
13.3%
Feb 2021
13.2%
Jan 2021
Yearly Comparison
-15%
13.3%
Feb 2021
28.3%
Feb 2020
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“Traditional big bank lending inched up ever so slightly in February. Most of the big banks are willing to make Paycheck Protection Program (PPP) loans that are backed by the government, so there is very little risk to them” said Biz2Credit CEO Rohit Arora, one of the nation’s leading experts in small business finance. “The big banks are less willing to make term loans or SBA 7(a) loans to anyone but their own customers or companies that are not truly small.” Biz2Credit, which has been the leading processor of PPP applications in the country since mid-January, finds that PPP loan requests represent the overwhelming percentage of applications made via the online platform in 2021.

Rohit Arora
Biz2Credit CEO
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Small Banks Image
Banks with assets less than $10 billion
Small banks’ approvals slipped a notch to 18.2% in February, compared to the 18.3% approval rate in January 2021. In contrast, small banks granted more than half (50.3%) of their small business loan applications in February 2020.
Monthly Comparison
-0.1%
18.2%
Feb 2021
18.3%
Jan 2021
Yearly Comparison
-32.1%
18.2%
Feb 2021
50.3%
Feb 2020
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Institutional Lenders Image
Investment groups or large investment portfolios such as insurance funds, mutual funds and hedge funds
Institutional lenders approved 23.1% of funding requests in February, up one-tenth of a percent from the 23.0% approval rate for business funding in January.
Monthly Comparison
+0.1%
23.1%
Feb 2021
23.0%
Jan 2021
Yearly Comparison
-42.4%
23.1%
Feb 2021
65.5%
Feb 2020
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Alternative Lenders Image
Independent lending organizations not licensed as banks or credit unions
Alternative lenders rose one-tenth of a percent from 23.7% in January 2021 to 23.8% in February 2021.
Monthly Comparison
+0.1%
23.8%
Feb 2021
23.7%
Jan 2021
Yearly Comparison
-32.1%
23.8%
Feb 2021
55.9%
Feb 2020
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Alternative lenders granted nearly six-in-ten applications,” Arora said. “Business owners are still hurting, and millions of them are applying for PPP loans,” Arora continued. “The companies that did not experience 25% decline in revenues are ineligible for the PPP and thus have to apply for more traditional types of funding. Securing capital is a challenge for them at the moment.”

Rohit Arora
Biz2Credit CEO
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Credit Unions Image
Non-profit money cooperatives whose members borrow from pooled deposits
Credit unions slipped two-tenths of a percent from 20.5% approval rate in January to 20.3% in February 2021. A year ago, credit unions approved 39.6% of the applications they received.
Monthly Comparison
-0.2%
20.3%
Feb 2021
20.5%
Jan 2021
Yearly Comparison
-19.3%
20.3%
Feb 2021
39.6%
Feb 2020

The Report

About Biz2Credit Small Business Lending Index™

The Biz2Credit Small Business Lending Index™ 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 Index™ 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.

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