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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

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Big BanksImage
Banks with assets greater than $10 billion
Small business loan approval percentages at big banks ($10 billion+ in assets) increased slightly to 13.2% in January 2021 from 2020’s figure of 13.1%, according to the latest Biz2Credit Small Business Lending Index™ released today

In comparison, big banks approved a record high 28.3% of the funding requests they received in January 2020. The Bureau of Labor Statistics reported nonfarm payroll employment changed little (+49,000) in January 2021, according to the Jobs Report released on Friday, Feb. 5.

The labor market continued to reflect the impact of the COVID-19 pandemic and efforts to contain it. In January, notable job gains in professional and business services and in both public and private education were offset by job losses in leisure and hospitality, in retail trade, in health care, and in transportation and warehousing. Many of these jobs are created by small businesses.

Monthly Comparison
+0.1%
13.2%
Jan 2021
13.1%
Dec 2020
Yearly Comparison
-15.1%
13.2%
Jan 2021
28.3%
Jan 2020
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“What a difference a year makes,” said Biz2Credit CEO Rohit Arora, one of the nation’s leading experts in small business finance. “Last year, it was relatively easy to secure small business financing from banks. This year, big banks are approving less than half of the non-Paycheck Protection Program (PPP) requests they receive.” Biz2Credit, which has been among the leading processors of PPP2 funding since mid-January finds that second loan requests account for approximately two-thirds of loan pre-applications for the government-approved funding.

Rohit Arora
Biz2Credit CEO
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Small Banks Image
Banks with assets less than $10 billion
Small banks approved 18.3% of business financing applications in January 2021, up one notch from 18.2% the month prior. In sharp contrast, small banks granted more than half (50.4%) of funding requests received in January of 2020.
Monthly Comparison
+0.1%
18.3%
Jan 2021
18.2%
Dec 2020
Yearly Comparison
-32.1%
18.3%
Jan 2021
50.4%
Jan 2020
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Institutional Lenders Image
Investment groups or large investment portfolios such as insurance funds, mutual funds and hedge funds
Institutional lenders approved 23.0% of applications for funding in January, up two-tenths from 22.8% in December. These figures highlight the challenges for small companies in search of capital. Last January, institutional lenders approved nearly two-thirds (66.4%) of their funding requests
Monthly Comparison
+0.2%
23.0%
Jan 2021
22.8%
Dec 2020
Yearly Comparison
-43.4%
23.0%
Jan 2021
66.4%
Jan 2020
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Alternative Lenders Image
Independent lending organizations not licensed as banks or credit unions
Alternative lenders rose from 23.5% in December 2020 to 23.7% in January 2021. These figures highlight the challenges for small companies in search of capital. Last January, alternative lenders granted 56.1% of their applications.
Monthly Comparison
+0.2%
23.7%
Jan 2021
23.5%
Dec 2020
Yearly Comparison
-32.4%
23.7%
Jan 2021
56.1%
Jan 2020
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Business owners who saw their revenues drop by 25% in 2020 are looking to the government for help via PPP loans,” Arora said. “However, companies that did not experience 25% decline in revenues are ineligible for PPP. It is very difficult for them to secure financing right now.”

Rohit Arora
Biz2Credit CEO
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Credit Unions Image
Non-profit money cooperatives whose members borrow from pooled deposits
Credit unions slipped one-tenth of a percent to a 20.5% approval rate in January from 20.6% in December 2020. A year ago, credit unions approved 39.6% of the applications they received.
Monthly Comparison
-0.1%
20.5%
Jan 2021
20.6%
Dec 2020
Yearly Comparison
-19.1%
20.5%
Jan 2021
39.6%
Jan 2020

The Report

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.