Small Business Loan Approval Percentages Hit New High Mark at Big Banks in January 2018, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
New Year starts strongly for small business lending as approval percentages and volume of loan requests increase
ahrefstartBusiness loanahrefend approval rates for big banks (25.3%) hit another new high last month, according to the latest Biz2Credit Small Business Lending Index TM (January 2018 figures). The monthly analysis examined more than 1,000 small business loan applications on Biz2Credit.com.
Big Banks
Big banks (assets of $10 billion+) are granting more than one-quarter of the small business loan applications they receive. The 25.3% approval percentage, up one-tenth of a percent from December, is yet another new benchmark for big banks.
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"Despite some recent bumps, the economy has done well during President Trump's first year in office, and tax cuts have also added to optimism among small business owners,"
Rohit Arora, Biz2Credit CEO
"With the economy showing such good signs, the number of small business owners applying for loans has risen. They are showing confidence and are willing to take risks."
Rohit Arora, Biz2Credit CEO
Small Banks
Small business loan approval rates climbed slightly at regional and community banks. Small banks approved 49.1% of the funding requests they received in January, up slightly from December. While they have flirted with the 50 percent mark since October 2014, small banks have not reached that benchmark since then.
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"Small banks continue to be a reliable source for SBA loans," added Arora, one of the country's leading experts in small business finance. "The trend is continuing in the new year. SBA loans often are made to startups and businesses owned by entrepreneurs who might not yet have good credit ratings and don't qualify for traditional term loans from banks."
Rohit Arora, Biz2Credit CEO
Institutional lenders
institutional lenders Additionally, institutional lenders remained at an Index record 64.3%, the same as in December. These lenders (pension funds, insurance companies, and others), continue to be important players in small business lending.
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Alternative lenders
Loan approval rates among alternative lenders in January dropped one-tenth of a percent to 56.6%. Approvals have dipped slowly each month for almost two years, except for a small uptick in November 2017.
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"Alternative lenders remain a source of funding for businesses that need money quickly or that have less than stellar credit histories," Arora explained. "With an economy ripe for entrepreneurship, borrowers at various levels of creditworthiness continue to apply for credit. Often, companies that cannot find funding from banks are able to securing financing from alternative (non-bank) lenders."
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions approved 40.3% of loan applications in January, a one-tenth of a percent drop from December.
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"While there is a continuing push to raise the lending cap limit for credit unions, they have not been successful. Meanwhile, banks, institutional lenders and alternative lenders, which have used financial technology to their advantage, have taken market share from them," Arora added. "I don't see this trend changing anytime soon, unless the cap is raised and investment in technology occurs."
Rohit Arora, Biz2Credit CEO
View Past Months
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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 |
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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.