Small Business Loan Approval Rates at Big Banks Reach New Record in January 2020: Biz2Credit Small Business Lending Index™

Small banks drop slightly, while Credit Unions hit new bottom

Small business leading

Biz2Credit Small Business Leading IndexTM

Small Business Loan Approval Rates at Big Banks Reach New Record

Big Banks

Big Banks

The approval percentage for small business loan applications at big banks ($10 billion+ in assets) rose one-tenth of a percent to reach 28.3% in January 2020, setting another new post-recession record high, according to the Biz2Credit Small Business Lending Index™ released today. According to the Bureau of Labor Statistics’ Jobs Report, 225,000 new jobs were created in January, and employment rose slightly to 3.6% because labor force participation rate increased to 63.4%. Many of these jobs are created by small businesses. Meanwhile, new U.S. jobless claims fell to 202,000, a 50-year low, while private payrolls soared by 291,000 in January, the largest gain in nearly five years. Small businesses are investing, expanding, and creating new jobs, and more underrepresented Americans are experiencing upward economic mobility as a result. Income inequality is shrinking, and wages are rising fastest among workers who have historically been left behind, including low-income women, African Americans and Latinos,” said SBA Administrator Jovita Carranza. “Today’s jobs report is welcome news for America’s 30 million small businesses.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

“The economy is strong, and optimism among small business owners is high, which creates a fertile atmosphere for small business lending,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “Interest rates remain low, which is encouraging to small companies seeking debt financing for their growth plans. The bottom line is that if your business performed well in the past two years, banks will be willing to lend.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

The approval rate at small banks dipped two-tenths of a percent from 50.6% in December to 50.4% in January.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

“Smaller banks because they process more SBA loans, and many SBA lending partner banks are likely to wait for 2019 tax returns to be filed before granting loans,” Arora explained. “This is a slight blip that happens every year in the first quarter. All signs indicate another strong year for small business growth.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders’ approval rates rose two-tenth of a percent from December’s figure of 66.2% to 66.4% in January 2020.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

“Institutional lenders keep expanding in the small business lending marketplace. They are able to offer funding at attractive interest rates and terms,” Arora said.

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Small business loan approval rates among alternative lenders dipped from 56.3% in December 2019 to 56.1% in January 2020.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

“Alternative lenders provide funding to companies that otherwise might not be able to secure financing from traditional bank lenders,” Arora said. “They are good at providing capital during for companies that are in a cash crunch.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

The approval percentage rate for credit unions reached a new record low of 39.6% in January, down one-tenth of a percent from December.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

“Credit unions are struggling in small business lending. There is no doubt that they must change the way they conduct business and upgrade their technology or partner with FinTech firms. Otherwise, I can’t see them surviving,” said Arora, who oversees the Biz2Credit research. “Credit unions should be able to process digital loan applications to keep up with the current lending marketplace.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

March 2020

Small Business Loan Approval Rates Plummet in March 2020: Biz2Credit Small Business Lending Index™

All Categories of small business lenders nosedive as coronavirus wreaks havoc on the economy

View Report
February 2020

Small Business Loan Approval Rates at Big Banks Remain at Record High in February 2020: Biz2Credit Small Business Lending Index™

Small Banks and Alternative Lenders drop, and Credit Unions remain at all-time low

View Report
January 2020

Small Business Loan Approval Rates at Big Banks Reach New Record in January 2020: Biz2Credit Small Business Lending Index™

Small banks drop slightly, while Credit Unions hit new bottom

View Report
December 2019

Banks’ Small Business Loan Approval Rates Hit Record High in December 2019: Biz2Credit Small Business Lending Index™

Improvement seen at big banks, small banks, and institutional investors

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.