Small Business Loan Approval Rates by Institutional Lenders Continue Increase, According to Biz2Credit's November Small Business Lending IndexsuperscriptstartTMsuperscruptend

Looming Interest Rate Hike Could Lead to Higher Loan Approval Rates

Small business loan approval rates at institutional lenders continued their gradual ascent, according to Biz2Credit's November Small Business Lending IndexsuperscriptstartTMsuperscruptend , an analysis of more than 1,000 loan requests of qualifying small business owners. While big banks maintained their overall healthy approval rates. However, loan approval rates for small business loans at small banks, credit unions and alternative lenders faltered.

Big Banks

Big Banks

Big banks ($10 billion+ in assets) approved 22.8% of small business loan approvals in November, which matched last month's figure. However, there is optimism that small business lending by big banks will increase in the coming months as Federal Reserve Chairwoman Janet Yellen recently hinted that the Fed would raise interest rates in the near future.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"An increase in interest rates would boost the incentive for big banks to approve a higher percentage of loan requests,"

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"As the financial spreads on these requests improves, I expect to see more loans approved with the mainstream lenders. Higher profitability on loans will lead to more loan approvals."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Lending approval rates at small banks dropped to 48.9% in November, from 49% in October. In addition, for a full calendar year, small banks have denied more than half of their loan requests.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"We are seeing more creditworthy borrowers opting for loans at big banks and institutional lenders," ."Small banks have suffered in the last year due to their failure to adapt to improvements in technology and other areas of operations, thus making it more difficult for small business owners to apply for loans. However, the looming interest rate increase should provide small banks with an opportunity to approve more loans."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders continued month-over-month growth in November, reaching 62.4%, up from 62.2% in October.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Institutional lenders are offering better terms to borrowers, and they are noticing,". "Investors are purchasing a greater number of loans at lower yields and longer terms as well as low regulatory risks. They are becoming very active players in small business lending."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Loan approval rates at alternative lenders dropped for a third straight month from 60.8% to 60.7% in November. Alternative lenders' approval percentages have steadily declined since January 2014, coinciding with the emergence of institutional lenders in the small business lending marketplace.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Alternative lenders are not offering competitive terms on their loans and thus are one of the final options for small business owners seeking capital," Arora stated. "This has resulted in less qualified borrowers and a gradual drop in loan approvals, despite the high interest rates that alternative lenders charge."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions approved 42.4% of loan applications in November, down one-tenth of a percent compared to October.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

"Credit unions are still limited, in part because of the failure to increase the credit union member business-lending (MBL) cap from 12.25% of their assets to 27.5%," Arora explained.

Rohit Arora

Rohit Arora, Biz2Credit CEO

View Past Months

Access Archives

Aug 2019

Small Business Loan Approvals at Banks Continue to Reach New Heights, According to August 2019 Biz2Credit Small Business Lending Index™

View Report
July 2019

Small Business Loan Approvals at Banks Hit Record Highs, According to July 2019 Biz2Credit Small Business Lending IndexTM

Alternative Lending Drops and Credit Unions Sink to a Record Low

View Report
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

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.