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January/2023

Biz2Credit Small Business Lending Index™ Reports Growth in Business Loan Approval Rates at Non-Bank Lenders in January 2023

Business loan approval rates rose at Institutional Investors, Alternative Lenders and Small Banks, while Big Banks and Credit Unions slipped again.
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Big BanksImage
Banks with assets greater than $10 billion
Small business loan approval percentages at big banks slipped again, falling from 14.5% in December to 14.4% in January 2023, according to the latest Biz2Credit Small Business Lending Index™ released today.

Total nonfarm payroll employment rose by a surprising 517,000 in January 2023. Meanwhile, the unemployment rate is currently at 3.4%, according to the Jobs Report released by the U.S. Bureau of Labor Statistics on Friday, Feb. 3. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care. Many of these jobs are created by small businesses.

Biz2Credit analyzed loan requests from companies in business more than two years with credit scores above 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's platform. To view the report for January 2023 click here.

Monthly Comparison
-0.1%
14.4%
January 2023
14.5%
December 2022
Yearly Comparison
-0.1%
14.4%
January 2023
14.5%
January 2022
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“The inflation rate has dropped quite a bit compared to what it was three or four months back, but with the latest Jobs Report showing such strong hiring numbers, the Fed may again raise interest rates. Thus, the cost of capital for small business will continue to climb,” said Rohit Arora, CEO of Biz2Credit, one of the nation’s leading experts in small business finance and fintech. “Business owners were hoping to see an end to interest rate hikes in early 2023, but it doesn’t appear that will happen soon.”

Rohit Arora
Biz2Credit CEO
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Small Banks Image
Banks with assets less than $10 billion
Small banks rose from 21.2% in December to 21.4% in January.
Monthly Comparison
+0.2%
21.4%
January 2023
21.2%
December 2022
Yearly Comparison
+1.1%
21.4%
January 2023
20.3%
January 2022
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Institutional Lenders Image
Investment groups or large investment portfolios such as insurance funds, mutual funds and hedge funds
Institutional lenders rose to 26.1% last month, up from 25.9% in December.
Monthly Comparison
+0.2%
26.1%
January 2023
25.9%
December 2022
Yearly Comparison
+1.0%
26.1%
January 2023
25.1%
January 2022
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Alternative Lenders Image
Independent lending organizations not licensed as banks or credit unions
Alternative lenders increased from 27.6% in December to 27.8% in January.
Monthly Comparison
+0.2%
27.8%
January 2023
27.6%
December 2022
Yearly Comparison
+1.5%
27.8%
January 2023
26.3%
January 2022
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“Alternative lenders and institutional lenders are seeing an uptick. With SBA loan and traditional term loan interest rates climbing, the cost of capital from non-bank lenders is not that much higher now,” Arora added. “Companies that need working capital are opting to get funding from non-bank lenders because even though the rates are a little higher, the money comes much quicker and it’s more of a sure thing.” “The latest job figures are a mixed blessing for small business owners. While people are working and spending, it also means that inflation likely will linger for a longer period of time, and the Fed may continue to raise rates, which obviously makes it more expensive to borrow money,” Arora said.

Rohit Arora
Biz2Credit CEO
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Credit Unions Image
Arora says the lending industry is watching closely what the SBA does, specifically whether the agency will approve fintech companies to process SBA loans.
Credit unions continue to drop. In January, credit unions approved 20.1% of loan requests, down one-tenth of a percentage from December.
Monthly Comparison
-0.1%
20.1%
January 2023
20.2%
December 2022
Yearly Comparison
-0.6%
20.1%
January 2023
20.7%
January 2022

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.

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