Small Business Financing at Big Banks and at Institutional Investors Hit New Post-Recession Highs, Credit Unions Dip to Historic Low, According to January 2015 Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend

Institutional Investors Gain Market Share From Small Banks and Alternative Lenders

Small business loan approval rates by big banks and institutional lenders reached post-recession highs in January 2015, according to the Biz2Credit Small Business Lending Index, the monthly analysis of 1,000 loan applications on Biz2Credit.com.

Big Banks

Big Banks

Big banks ($10 billion+ in assets) approved 21.3% of small business loan requests in January 2015, up from 21.1% in December 2014.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"Big banks set another Index high because they are willing and able to make large loans and still have an interest rate advantage over competitors."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"The big banks typically seek to grant loans in excess of $2 million."

Economy

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

For the third consecutive month, small banks are denying more than half of their loan requests. Further, lending approval rates by small banks dropped for the eighth month in a row as they approved 49.6% of loan requests from small business owners in January, which is slightly below December's mark of 49.7%.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"Small banks are in a crunch; they cannot compete with the brand name advantages and low rates of big banks. Meanwhile, they haven't kept pace with online and mobile loan applications when institutional lenders are investing heavily in it. Small banks can't make decisions as quickly, and borrowers are going elsewhere".

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Meanwhile, institutional lenders granted 60.5% of funding requests by small business owners in January, an increase from 60.1% in December. Approval rates by institutional lenders have increased each month since Biz2Credit began monitoring this category of lenders one year ago.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Institutional lenders are making longer term (5-year) loans and giving them larger amounts -- up to $1 million." "Their approval rates are higher because the investments they have made in technology enables them to act quickly and minimize risk. Small banks and credit unions are lagging in technological updates."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Approval rates at alternative lenders -- merchant cash advance companies, factors, and other non-bank institutions -- slipped for the 12th straight month to 61.6% in January, from 61.8% in December.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Like small banks, alternative lenders have been hurt by the emergence of institutional players. With a growing economy, healthy small businesses do not need to borrow money at the high interest rates they paid during the credit crunch when they were desperate for money".

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions granted 43.2% of loan applications in January, a slight drop in the approval rate of 43.3% from the previous month. They continue to struggle in the small business finance marketplace.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

View Past Months

Access Archives

October 2019

Big Banks’ Small Business Loan Approvals Hit New Record in October, According to Biz2Credit Small Business Lending Index™

Strength seen in lending by big banks, small banks, and institutional investors last month

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September 2019

Small Business Loan Approvals at Big Banks Hit New Record in September, According to Biz2Credit Small Business Lending Index™

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Aug 2019

Small Business Loan Approvals at Banks Continue to Reach New Heights, According to August 2019 Biz2Credit Small Business Lending Index™

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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

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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.