Strong Economy Leads to Record High Small Business Loan Approval Percentages at Big Banks in July, According to The Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
All categories of lenders to small businesses performed well in July 2018
ahrefstartSmall business loanahrefend approval rates for big banks reached another high point in July 2018, according to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend released today.
Big Banks
The July approval percentage for big banks (assets of $10 billion+) rose two-tenths of a percent from June's figure of 26.1% to 26.3%, according to Biz2Credit's monthly report, which examines more than 1,000 credit applications made by small businesses via the company's online lending platform.
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"The Fed rated the economy as strong this month, and the Jobs Report found that the economy keeps adding jobs in many sectors. In addition, there is optimism among small business owners. All of these factors create an atmosphere that is ripe for small business lending" "Business owners continue to invest in their firms and are finding success in securing capital, according to our latest figures."
Rohit Arora, Biz2Credit CEO
On August 1, the Federal Reserve issued a statement that economic activity has risen at a strong rate. The Fed expects to continue gradual increases in the federal funds interest rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the central bank's 2 percent target.
Further, according to the August 3rd Jobs Report, unemployment for people who do not have a high school diploma dropped to 5.1 percent in July, the lowest figure since the Labor Department began reporting on this group of workers in 1992. The Jobs Report also stated that nonfarm employment increased by 157,000 in July and that professional and business services, manufacturing, healthcare and social assistance, added jobs during the month. Figures also rose for the food & beverage, hospitality, construction and healthcare services industries.
"Many of the new jobs now being filled have been created by small businesses". "Opportunities are abound for all workers, including workers who do not have high levels of education."
Rohit Arora, Biz2Credit CEO
Small Banks
Business loan approval rates rose at regional and community banks. Small banks granted 49.7% of the funding requests they received in July, up one-tenth from June. It represents the highest figure for small banks since December 2014. Banks reportedly eased important lending terms, including maximum loan size and the spread of loan rates over their cost of funds, for commercial real estate (CRE) loans, according to the Fed's latest updated ahrefstartSenior Loan Officer Opinion Surveyahrefend on Bank Lending Practices. Almost all banks that reportedly eased CRE credit policies pointed to aggressive competitors, including nonbank lenders, as a major reason for easing, according to the survey.
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"Small banks continue to approve SBA loan applications, which enable younger, growing companies to secure financing because government backing helps reduce lenders" exposure to risk". "Smaller banks are a good source of capital for startups and companies with less than stellar credit ratings." "Real estate entrepreneurs are looking for CRE loans for fix-and-flip projects that have become quite lucrative" . "These projects help upgrade neighborhoods and provide jobs in the construction industry, which is doing well in this economy."
Rohit Arora, Biz2Credit CEO
Institutional lenders
institutional lenders remained unchanged at an Index record 64.8%, the same as June's figure.
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"Institutional lenders (pension funds, insurance companies, and others), are an important and growing player in the small business credit marketplace". "They offer competitive interest rates and long repayment terms."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates among alternative lenders remained at 56.5 %, the same as the month prior.
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"There will always be a demand for funding from non-bank lenders. They are willing to lend money to small businesses that do not qualify for traditional bank loans" . "Alternative lenders are a source of quick capital, but borrowers do pay high interest rates for the money."
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions approved 40.3% of loan applications in July, the same as in June, according to the Biz2Credit Index.
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"Overall, July 2018 was a strong month for small business lending approvals across all categories of lenders."
Rohit Arora, Biz2Credit CEO
View Past Months
Access Archives
| March 2023 |
Small Business Bank Loan Approvals Dropped Dramatically in March: Biz2Credit Study |
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Biz2Credit Small Business Lending Index finds funding requests at banks declined after Silicon Valley Bank’s collapse; borrowers had more success with non-bank lenders. |
| View Report |
| February 2023 |
Biz2Credit Small Business Lending Index™ Reports a Decrease in Loan Approval Rates at Banks and Credit Unions in February 2023 |
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Business loan approval rates rose at Institutional Investors and Alternative Lenders. |
| View Report |
| January 2023 |
Biz2Credit Small Business Lending Index™ Reports Growth in Business Loan Approval Rates at Non-Bank Lenders in January 2023 |
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Business loan approval rates rose at Institutional Investors, Alternative Lenders and Small Banks, while Big Banks and Credit Unions slipped again. |
| View Report |
| December 2022 |
Biz2Credit Small Business Lending Index™ Reports Little to No Growth in Loan Approval Percentages in 2022 |
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December 2022 approval rates rose slightly at Small Banks, Institutional Investors, and Alternative Lenders while Big Banks and Credit Unions stalled last month. |
| 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.