Biz2Credit's July Small Business Lending IndexsuperscriptstartTMsuperscruptend Shows Institutional Investors Dominating Market

Big Banks Gain Market Share While Small Banks and Credit Unions See Dip

Small business loan approval rates through institutional investors and alternative lenders remained higher than any other category in July 2015, according to the Biz2Credit Small Business Lending Index, the monthly analysis of 1,000 loan applications on ahrefstartBiz2Credit.comahrefend. Both categories approved approximately 61% of Biz2Credit's total loan requests, surpassing the loans approved through Big Banks, small banks and credit unions.

Big Banks

Big Banks

Big Banks ($10 billion+ in assets) increased slightly from June, approving 22.4% of small business loan requests in July, up from 22.19%, marking the ninth consecutive month that approval rates have increased for the largest banks.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"The trend clearly shows that Big Banks are getting more aggressive in the small business lending space and are starting to invest money in digitizing their loan offerings. We have seen more instances of banks coming back in asset backed lending as well as commercial real estate lending markets and less so in working capital as of now."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Lending approval rates at small banks dropped one-tenth of a percent in July to 49.2% from 49.3% last month. For the ninth consecutive month, small banks have denied more than half of their loan requests.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

Institutional lenders

Institutional lenders

Institutional lenders approved the most loans out of all the categories: 61.7% in July, up from 61.4% in June. Lending approval rates at institutional lenders have exceeded those of alternative lenders, such as merchant cash advance companies, factors and other non-bank lenders. Approval rates by institutional lenders have increased every month since January 2014 when Biz2Credit began monitoring this category, a year-over-year growth percentage of 8.67%.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Institutional investors are becoming a bigger part of the market, which can be seen by recent changes in business models from several large online balance sheet lenders". "Lenders on Biz2Credit platform started offering commercial real estate backed loans for institutional investors to purchase and some of our peers in the industry recently signed multimillion dollar purchase commitments or credit facilities with institutional investors."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Second to the institutional investor approval rates were alternative lenders. While still a large part of the market share, alternative lenders remained flat at 61% in July, an Index-low for the second month in a row. Alternative lenders' approval percentages have steadily declined since January 2014, coinciding with the emergence of institutional lenders in the small business lending marketplace.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"In the last few months as banks and institutional investors have gotten more aggressive in the marketplace, alternative lenders like cash advance and MCA players have become less competitive," . "For example, these companies are charging higher rates and providing shorter terms to borrowers."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions approved 42.9% of loan applications in July, down one-tenth of a percent compared to June.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"Small banks and credit unions are facing increasing pressure in the marketplace as more creditworthy borrowers are moving either to Big Banks or to institutional investors through online marketplaces to receive better terms and faster access to credit" . "To stem this tide, these smaller financial institutions must ramp up their online lending offerings and ultimately fund more borrowers."

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

Aug 2019

Small Business Loan Approvals at Banks Continue to Reach New Heights, According to August 2019 Biz2Credit Small Business Lending Index™

View Report
July 2019

Small Business Loan Approvals at Banks Hit Record Highs, According to July 2019 Biz2Credit Small Business Lending IndexTM

Alternative Lending Drops and Credit Unions Sink to a Record Low

View Report
June 2019

Small Business Loan Approvals at Big Banks Hit Record Highs, According to June 2019 Biz2Credit Small Business Lending IndexTM

Big Banks, Regional and Community Banks, and Institutional Lenders Climb, While Alternative Lending Drops and Credit Unions Sink to New Low

View Report
May 2019

Small Business Loan Approvals at Big Banks Stay at Record Post-Recession High, According to May 2019 Biz2Credit Small Business Lending IndexTM

Small Banks and Institutional Lenders Climb, Credit Union Lending Remains at Post-Recession Low, Alternative Lending Stalls Again

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.