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

Small business leading

Biz2Credit Small Business Leading IndexTM

Small Business Loan Approval Rates at Banks Rose in February 2021

Big Banks

Big Banks

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

March 2020
15.4%
April 2020
8.9%

Monthly Comparison

April 2019
27.5%
April 2020
8.9%

Yearly Comparison

“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

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

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.

March 2020
38.9%
April 2020
11.8%

Monthly Comparison

April 2019
49.8%
April 2020
11.8%

Yearly Comparison

“Approvals of traditional business loans and SBA loans at small banks are less than half of what they were a year ago,” Arora said. “Many businesses are hurting right now. Most that are coming to us qualify for PPP funding because their revenues dropped dramatically in 2020 after the pandemic hit.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

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.

March 2020
41.2%
April 2020
18.1%

Monthly Comparison

April 2019
65.3%
April 2020
18.1%

Yearly Comparison

“These figures highlight the challenges for small companies in search of capital. In February 2020, institutional lenders approved nearly two-thirds (66.5%) of their funding request" Arora said.

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Alternative lenders rose one-tenth of a percent from 23.7% in January 2021 to 23.8% in February 2021.

March 2020
30.4%
April 2020
15.2%

Monthly Comparison

April 2019
57.2%
April 2020
15.2%

Yearly Comparison

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

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

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.

March 2020
23.2%
April 2020
18.1%

Monthly Comparison

April 2019
40.1%
April 2020
18.1%

Yearly Comparison

“Like bank lenders, credit union approval percentages are dramatically lower than they were a year ago,” Arora noted.

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

August 2021

Biz2Credit Small Business Lending Index™ for August Finds Loan Approval Rates Rise at Banks and at Non-Bank Lenders

View Report
July 2021

Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates Rose at Banks and at Institutional and Alternative Lenders in July 2021

View Report
June-2021

Biz2Credit Small Business Lending Index™ Finds June 2021 Loan Approval Rates Increased for All Categories of Lenders

View Report
May-2021

Now That PPP Lending Has Ended, Biz2Credit Small Business Lending Index™ Finds May 2021 Loan Approval Rates Increase for Banks and Non-Bank Lenders

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.