Small Biz Lending Approval Rates Improve at Institutional Investors and Small Banks, Stall at Big Banks in March 2017, According to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Lending at Alternative Lenders and Credit Unions Continues to Falter
Loan approval rates at institutional investors and small banks improved in March 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. Big banks' ($10 billion-plus in assets) loan approval were stagnant in the last month, but remained at an all-time Index high. Meanwhile, loan approval rates at credit unions and alternative lenders continues to falter.
Big Banks
Small business loan approval rates at big banks remained at 24.1% in March 2017, effectively ending seven consecutive months of increases. However, the outlook for lending at big banks is still strong, coinciding with the confidence in the economy and looming interest rate hikes that the Federal Reserve is expected to implement this year.
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"The Fed's recent announcement that it wants to start unwinding the $4.5 trillion in bonds on its balance sheets bodes well for banks."
Rohit Arora, Biz2Credit CEO
"It signals that the economy is strong and will likely result in yet another interest rate hike. Since a majority of small business loans are linked to U.S. prime interest rates, this will improve spreads at banks while providing more incentives to approve funding requests."
Rohit Arora, Biz2Credit CEO
Small Banks
Loan approval rates at small banks bounced back in March, improving by one-tenth of a percent to 48.9% as the category of lenders continues to approach that 50% mark, which has eluded them for the last two and a half years.
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"We are seeing more small businesses taking advantage of SBA loan programs", one of the nation's leading experts in small business finance. "SBA-backed loans are popular with small business owners and lenders because of the mitigated risk involved for those financing the loan products. As a result, this has become a popular vehicle for entrepreneurs to leverage in order to get access to funding."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders' loan approval rates improved to 63.6%, reaching a new high mark on Biz2Credit's analysis. It marked the third time in the last four months that this category of lenders experienced an uptick in their funding approval percentages.
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"The strong values of the stock market and U.S. dollar continue to attract a high volume of investors from all over the world". "While there isn't cause for alarm yet, the Fed's plan to start reducing bonds on its balance sheet could result in diminishing liquidity for institutional lenders. There is concern that some of President Trump's proposed plans such as tax reform and infrastructure could result in inflation."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates dropped at alternative lenders by two-tenths of a percent in March, as they granted 58.2% of the loan requests. This marks the ninth consecutive month of decreases in this category of lenders.
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"As their competitive advantage - speed in processing loans -becomes less and less, alternative lenders continue to struggle to take market share away from lenders". "The advancements in technology at big banks and institutional lenders channels more creditworthy borrowers to these institutions and leaves alternative lenders with less attractive borrowers."
Rohit Arora, Biz2Credit CEO
Credit unions
Loan approval rates at credit unions dropped one-tenth of a percent in March to 40.7%, the lowest mark to date in this category of lenders as it continues its downward spiral in the small business lending game.
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"Credit unions are routinely overlooked in small business loans as they lag behind in technology". "Competing lending institutions are taking market share away from credit unions, which are often left with less creditworthy borrowers. Thus, their approval percentages go down."
Rohit Arora, Biz2Credit CEO
View Past Months
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| February 2021 |
Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates in February 2021 Changed Little from January, But Dropped Dramatically from February 2020 |
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As Small Business Businesses Apply for PPP Funding, Approval Percentages for Traditional Loans Plummet |
| View Report |
| January 2021 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Increased Slightly in January 2021, But Are Down More Than 50% from One Year Ago |
| View Report |
| December 2020 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Declined in December 2020, Are Down More Than 50 Percent from One Year Ago |
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Approval percentages for all categories of lenders dropped more than 50% from December 2019 |
| View Report |
| November 2020 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Declined in November 2020, Are Down More Than 50 Percent from One Year Ago |
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Approval percentages are down 50% or more for all categories of small business lenders as the pandemic surges |
| 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.