Small Biz Loan Approval Rates at Big Banks and Institutional Investors Improve in May 2016, According to Biz2Credit Small Business Lending Index

Ahead of Federal Reserve's Next Meeting, Lending Falters at Small Banks, Alternative Lenders, and Credit Unions

Loan approval rates at big banks ($10 billion+ in assets) and institutional lenders increased in May 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, small banks, alternative lenders and credit unions experienced a drop in their loan approval rates in the last month.

Big Banks

Big Banks

Big banks Small business loan approval rates at big banks ($10 billion+ in assets) improved to a new all-time Index high of 23.2%, up one tenth of a percent over the last month. In a year-to-year comparison, big banks are approving 6% more funding requests on average. It was the seventh time in the last nine months that lending approval rates increased at big banks.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"Big banks have demonstrated their commitment to small business lending over the last two years with investments in automation that have resulted in higher profit margins."

Rohit Arora

Rohit Arora, Biz2Credit CEO

economy

"If the Federal Reserve decides to increase interest rates at the June 14-15 meeting, I expect lending approval rates at big banks to continue to surge. However, with the potential economic fallout likely if Britain leaves the European Union, an interest rate hike may not come until later this summer."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Meanwhile, for the fourth time in the last five months, lending approval rates dropped at small banks down to 48.7% in May 2016, matching a two and a half year low.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"As big players such as J.P. Morgan and Wells Fargo expand in small business lending, it continues to negatively impact small banks." "When lenders invest in technology, small business owners can now receive funding in a matter of days. This has led to higher quality borrowers gravitating to the larger financial institutions."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders rebounded after experiencing their first drop in loan approval rates in over two years during April. Loan approval rates improved by one-tenth of a percent to 62.8% in May, 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

"For the better part of the last two years, institutional lenders have been one of the stronger driving forces in the industry." "The rebound in May is encouraging. High yields and low default rates allow this category of lenders to continue to thrive."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Alternative lenders took yet another big hit in May, now approving three out of five loan requests on average. Last month, lending approval rates dropped to 60%. Over the last two and a half years, alternative lenders' approval rates have dropped significantly; they granted more than two-thirds of their loan requests (67.3%) in December 2013.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"The economic recovery has been beneficial to small business owners in many ways, and borrowing is near the top of that list". "Small business owners with good-standing credit no longer have to borrow at any cost. Instead, they are moving away from the high-cost loans typically associated with alternative lenders, which are now forced to grant riskier loans to make a profit."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions continued their long decline in loan approval rates, granting a new all-time Index low of 41.7% in May, down two tenths of a percent from April. Loan approval percentage rates have declined at credit unions every month in the past 12 months.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"Credit unions keep losing out. The reasons are their inability or unwillingness to adapt to technology and the stalled efforts to increase the member business lending cap." "This combination has been devastating to this category of lenders. Until something changes, I expect the downward trend to continue."

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

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
February 2019

Small Business Loan Approvals at Big Banks Hit New High; Other Categories of Lender Dip Slightly, According to Biz2Credit Small Business Lending IndexTM

Lending Atmosphere Still Solid for Small Business Borrowers

View Report
January 2019

Government Shutdown Slows SBA Lending Volume, But Approval Percentage Dip Only Slightly in January, According to Biz2Credit Small Business Lending IndexTM

Overall Economic Strength Still Bodes Well for Small Businesses in Search of Capital

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.