Small Business Loan Approval Percentages Hit Record Highs for Banks and Institutional Lender in May, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Strong Economy and Job Growth Reflected in Figures
ahrefstartSmall business loanahrefend approval rates for big banks (25.9%) continued the upswing with yet another new high in May 2018, according to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend (May figures) released today. The monthly analysis examined more than 1,000 credit applications from small businesses on Biz2Credit.com.
Big Banks
Big banks (assets of $10 billion+) are granting nearly three-in-ten small business loan applications, according to Biz2Credit figures. The 25.9% approval percentage, up two-tenths of a percent from April 2018, represents a post-recession high point for big banks.
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"May was another strong month for banks as they have benefitted from the overall strength of the economy, "
Rohit Arora, Biz2Credit CEO
"The unemployment rate hit an 18-year low, and average hourly pay rose 2.7 percent from a year prior. Notably, the Labor Department reported employment in construction continued on an upward trend in May with more than 25,000 new jobs created. There were also large increases in manufacturing, transportation and warehousing jobs. The U.S. economy is strong right now."
Rohit Arora, Biz2Credit CEO
Small Banks
ahrefstartSmall business loanahrefend approval rates rose at regional and community banks. Small banks granted 49.4% of the funding requests they received in May, up two-tenths from April. It represents the highest figure for small banks since May 2015
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"Small banks make a lot of SBA loans, which help small businesses expand. Many of these companies are involved in manufacturing, transportation and construction" . "Small businesses involved in those sectors need capital for growth, and smaller banks are now granting nearly half of their loan applications"
Rohit Arora, Biz2Credit CEO
Institutional lenders
institutional lenders set yet another new Index record 64.7%, up one-tenth of a percent from April. These lenders (pension funds, insurance companies, and others), have become important players in small business lending.
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"Institutional investors are seeking high yields, and small business lending," ."Foreign investors are continuing to become involved. Small business lending is becoming a very important asset class for institutional lenders, who are able to offer funding at reasonable interest rates and term lengths."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates among alternative lenders remained at 56.4% from April. Approval percentages have slipped every month for almost two years, with the exception of a small uptick in November 2017.
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"Even in a robust economy, there are still companies that don't qualify for traditional small business loans because they have not been in business long or have poor credit histories," . "Alternative lenders fill this niche; they are willing to provide funding, albeit at higher interest rates."
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions approved 40.1% of loan applications in May, a one-tenth of a percent drop from April, which had set a record low for the Biz2Credit Small Business Lending Index.
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"Credit union lending to small business has stagnated," Arora said. "Not much has changed for them in the past couple of years."
Rohit Arora, Biz2Credit CEO
View Past Months
Access Archives
| 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 |
| October 2020 |
Small Business Loan Approval Rates at Banks Declined in October 2020: Biz2Credit Small Business Lending Index™ |
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Small Businesses Capital Is Hard to Secure |
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| September 2020 |
Small Business Loan Approval Rates at Banks Fell Again in September 2020: Biz2Credit Small Business Lending Index™ |
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Small Businesses in Limbo Awaiting PPP Loan Forgiveness |
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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.