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