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