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
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.
“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.
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.”
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.