Government Shutdown Slows SBA Lending Volume, But Approval Percentage Dip Only Slightly in January, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Overall Economic Strength Still Bodes Well for Small Businesses in Search of Capital
Although the U.S. Small Business Administration (SBA) was closed for most of January because of the government shutdown, the percentage of SBA loan approvals dropped by just one percent in January at regional and community banks, which process the bulk of the government-backed loans.
Big Banks
ahrefstartSmall business loanahrefend approval rates for big banks remained at a record high 27% in January 2019, according to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend, which examines more than 1,000 small business credit applications made via its online lending platform. "Beth Goldberg, Director of SBA's New York District, the agency's largest of 68 offices across the country, said that SBA processed more than 1,100 7(a) loans worth half a billion dollars in its first week back after the shutdown. ."
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"The government shutdown ultimately did not have a major impact on small business lending," one of the nation's leading experts in small business finance.
Rohit Arora, Biz2Credit CEO
"Our top priority was and continues be to working with SBA lenders to approve and process small business loans to get capital into the hands of the businesses that need it," Goldberg said. "Remember that through the shutdown, SBA's Resources Partners - Small Business Development Centers, SCORE Chapters and Women's Business Centers continued to work with entrepreneurs, counseling them on all aspects of their businesses."
"Goldberg added that since reopening on January 28th, her office has guaranteed more than 200 SBA loans worth $59.3 million. " "Meanwhile, the Jobs Report released on Feb. 1 saw an unexpected rise in job creation, and Federal Reserve opted not to raise interest rates at its first meeting of the year. "
"There are still hurdles, however. Many companies are waiting for SBA loans that have not yet been processed."
Rohit Arora, Biz2Credit CEO
Small Banks
Business loan approval rates dropped three-tenths of a percent at regional and community banks in December 2018. Small bank approvals dropped a full percentage point from 49.9% in December 2018 to 48.9% in January.
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" Overall, the economy is still performing well on many levels, " who oversees the research. "This is beneficial to the small business lending market."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders climbed up to 65.1 %, a jump of three-tenths of a percent from December's mark of 64.8%.
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Alternative lenders
Loan approval rates among alternative lenders rose from 56.6% in December to 57.3% in January, a jump of seven-tenths of a percent.
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"As SBA lending stalled during the shutdown, alternative lenders took advantage of the opportunity by lending money to business owners in need of quick capital". "Non-bank lenders fill the gaps many times for borrowers who cannot get money from traditional sources."
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions approvals increased to 40.3% of loan applications in January, up one-tenth of a percentage from December, according to the Biz2Credit Index.
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"Despite the government shutdown, January was a solid month for small business lending."
Rohit Arora, Biz2Credit CEO
View Past Months
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| May 2020 |
Small Business Loan Approval Rates Rebounded in May 2020: Biz2Credit Small Business Lending Index™ |
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Improvement in Approvals for Companies Applying for Non-CARES Act Loans |
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| April 2020 |
Small Business Loan Approval Rates Dropped to Record Lows in April 2020: Biz2Credit Small Business Lending Index™ |
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PPP Lending Dominates Small Business Lending, but Some Companies Applied for Non-CARES Act Funding |
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| March 2020 |
Small Business Loan Approval Rates Plummet in March 2020: Biz2Credit Small Business Lending Index™ |
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All Categories of small business lenders nosedive as coronavirus wreaks havoc on the economy |
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| February 2020 |
Small Business Loan Approval Rates at Big Banks Remain at Record High in February 2020: Biz2Credit Small Business Lending Index™ |
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Small Banks and Alternative Lenders drop, and Credit Unions remain at all-time 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.