Small Biz Loan Approval Rates Drop at Big Banks and Alternative Lenders in July 2016, According to Biz2Credit Small Business Lending Index

Institutional Lenders and Small Banks Fill Void

Loan approval rates at big banks ($10 billion+ in assets), alternative lenders, and credit unions dipped in July 2016, according to the most recent Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Meanwhile, institutional lenders and small banks filled the void, approving loans at higher rates last month.

Big Banks

Big Banks

Big banks Small business loan approval rates at big banks ($10 billion+ in assets) dropped to 23.1% in July, down two-tenths of a percent from June's figure.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

" The economy in the second quarter was a bit sluggish because of slower global growth; this impacts big banks more than other lenders."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"When there is turbulence in international markets, such as the angst over Britain's laving the EU, big banks tend to become more conservative in their lending. Brexit had some impact, but not a major one, on small business finance."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Meanwhile, lending approval rates increased slightly at small banks up to 48.9% in July.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"Small banks process more SBA-backed loans than big banks do. SBA loans minimize the overall risk assumed when loan requests are approved". "The current state of the global market doesn't have as much influence on small banks as it does with big banks. They filled the void in July when the big banks skidded a little bit."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders' loan approval rates bounced back in July to 62.8%, matching an all-time Index high.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Over the last two years, institutional lenders have emerged as a strong driving force in the industry and continue to provide affordable loan products to borrowers with high rates of success", one of the nation's leading experts on small business finance. "This category of lender is doing well because of high yields and low default rates. Further, institutional investors from other countries are looking to enter the U.S. market as there currently is much global uncertainty, especially in Europe. This is encouraging for small business owners and start-ups seeking capital. I expect this trend to continue."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Alternative lenders experienced a decrease in loan approval rates in July and approved three out of five loan requests (60%). However, this category of lenders experienced a decrease in loan approval rates in four out of the last five months.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Alternative lenders have steadily lost favor among small business borrowers, in large part because their cost of capital is so high". "Credit-worthy borrowers can typically secure better interest rates and terms from other types of lenders. Alternative lenders still have some appeal for borrowers whose credit scores might be low."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions continued their slow decline in loan approval rates, drop to an all-time Index low of 41.5% in July, down one-tenth of a percent from June. Loan approval percentage rates have declined at credit unions every month for more than a year.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"Credit unions are behind in the times when it comes to utilizing digital technology. This slows down the loan process significantly". "Borrowers prefer to receive the funding from their loan requests as quick as possible, and thus are opting to competing categories of lenders from whom they can receive funding faster."

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

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

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April 2019

Small Business Loan Approvals at Banks Jumped Again in April Biz2Credit Small Business Lending IndexTM

Credit Union Lending Remains at Post-Recession Low

View Report
March 2019

Small Business Loan Approvals at Big Banks Hit New High: Biz2Credit Small Business Lending IndexTM

Credit Union Lending Percentages Drop to Historic, Post-Recession Low

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.