Loan Approval Rates Rebound at Big Banks in June 2017, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend

Lending Continues to Stall at Alternative Lenders, Credit Unions and Small Banks

Loan approval rates at big banks ($10 billion-plus in assets) increased to post-recession highs in June 2017, according to the latest Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend , the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Meanwhile, small banks, alternative lenders and credit unions all experienced a decline in the percent of funding requests they approved. While loan approval rates at institutional investors remained stagnant.

Big Banks

Big Banks

Small business loan approval rates at big banks bounced back in June, improving two-tenths of a percent to 24.3%, matching an all-time Index high. It marked the eighth time in the last 12 months that loan approval rates increased at this category of lenders.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"For the third consecutive quarter, the Federal Reserve has voted to increase its benchmark interest rate to a range between 1 percent and 1.25 percent in a vote of confidence in the economy. This bodes well for big banks,"

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"Small business lending is strong among mainstream lending institutions. The interest rate increase are resulting in more profitable deals for big banks. This is incentivizing these mainstream lending institutions to approve a higher percentage of loan requests."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Loan approval rates at small banks dropped slightly in June to 48.7%, down from May's 48.8% figure. It marked the second consecutive month that loan approval rates dropped in this category of lenders.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"Despite this small dip, small banks are a good source for small business funding, particularly for SBA-backed loans," said Arora, one of the leading experts in small business finance. "Small banks have not crossed the 50 percent threshold."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders loan approval rates in June remained stagnant at 63.8%. However, the percentage marks an all-time high for Biz2Credit's index, continuing an 11-month streak of neutral or positive gains in loan approval rates.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"The Fed has expressed its confidence in the U.S. economy as the dollar remains strong on global markets, which dictates strong interest from international players in the space," said Arora."This has resulted in more loans being granted from international investors as the category of lenders continues to revolutionize lending."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Loan approval rates dropped at alternative lenders by two-tenths of a percent in June, as non-bank lenders granted 57.5% of the funding requests. This marks one full calendar year of consecutive decreases for this category of lenders.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Approval percentages at big banks and institutional investors are at post-recession highs. The result is that alternative lenders get requests from less creditworthy borrowers. These are riskier deals," . "At the same time, banks and institutional lenders can process loan requests quickly and at lower rates, which brings them more attractive borrowers. These are the primary reasons we have seen such a downward spiral for the alternative lender category."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Loan approval rates at credit unions dropped one-tenth of a percent in June to 40.4%, another new low for this category of funders on Biz2Credit's index.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"In the FinTech era, credit unions have fallen behind because other categories of lenders have embraced technology. In the process, they lowered their risk, while many credit unions have remained somewhat old fashioned," Arora says. "Credit unions typically process loan requests at a slower rate, and in today's fast paced economy, borrowers simply aren't willing to wait. Credit unions are becoming less relevant in small business lending."

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

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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
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.