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

Small business leading

Biz2Credit Small Business Leading IndexTM

Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Roses in January 2021

Big Banks

Big Banks

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.

March 2020
15.4%
April 2020
8.9%

Monthly Comparison

April 2019
27.5%
April 2020
8.9%

Yearly Comparison

“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

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

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.

March 2020
38.9%
April 2020
11.8%

Monthly Comparison

April 2019
49.8%
April 2020
11.8%

Yearly Comparison

Institutional lenders

Institutional lenders

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

March 2020
41.2%
April 2020
18.1%

Monthly Comparison

April 2019
65.3%
April 2020
18.1%

Yearly Comparison

Alternative lenders

Alternative lenders

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.

March 2020
30.4%
April 2020
15.2%

Monthly Comparison

April 2019
57.2%
April 2020
15.2%

Yearly Comparison

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

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

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.

March 2020
23.2%
April 2020
18.1%

Monthly Comparison

April 2019
40.1%
April 2020
18.1%

Yearly Comparison

View Past Months

Access Archives

March 2021

Biz2Credit Small Business Lending Index™ Finds March 2021 Non-PPP Loan Approval Rates Trending Upwards for All Categories of Lenders

PPP Lending Still Dominates Small Business Loan-Making in March 2021

View Report
February 2021

Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates in February 2021 Changed Little from January, But Dropped Dramatically from February 2020

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

Approval percentages for all categories of lenders dropped more than 50% from December 2019

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.