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

Approval percentages are down 50% or more for all categories of small business lenders as the pandemic surges

Small business leading

Biz2Credit Small Business Leading IndexTM

Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Declined in November 2020

Big Banks

Big Banks

Small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.3% in October to 13.2% in November, an indication that the challenges for small business owners in need of financing continue, according to the latest Biz2Credit Small Business Lending Index™ released today. In comparison, big banks approved 28.1% of the funding requests they received in November 2019. “Even though many companies are operating at a loss right now and need capital, they are discouraged from applying for funding because of the likelihood or rejection as approval rates drop and because there is so much economic uncertainty caused by the coronavirus,” said Biz2Credit CEO Rohit Arora, one of the nation’s leading experts in small business finance. “Business owners are anxiously awaiting the enactment of a second Paycheck Protection Program (PPP) that would provide forgivable loans to survive the current pandemic surge. Without significant federal assistance, small companies all across the country will struggle. Many of them will not survive.” The U.S. Bureau of Labor Statistics’ Jobs Report on Friday, December 4, found that nonfarm payroll employment rose by 245,000 in November, and the unemployment rate edged downward to 6.7%. The improvements in the labor market reflect the continued resumption of economic activity that was curtailed by the coronavirus pandemic and efforts to contain it. Notable job gains occurred in transportation and warehousing in November as holiday gifts are on their way to stores and to consumers. Employment also rose in professional and business services, and health care.

March 2020
15.4%
April 2020
8.9%

Monthly Comparison

April 2019
27.5%
April 2020
8.9%

Yearly Comparison

“A study this week reported that more than 30% of small businesses in New Jersey have closed. This would have seemed inconceivable less than a year ago. My fear is that if a government stimulus package is not enacted, even more businesses will go under,” Arora said. “As the virus seems to be spiking again, local governments may enact tighter restrictions on the operations of restaurants, gyms, and other businesses. This would put a great strain on businesses that are already not likely to survive much longer without help.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

During November, small banks approved 18.3% of business financing applications, down one notch from 18.4% the month before. In sharp contrast, small banks granted more than half (50.5%) of funding requests last November.

March 2020
38.9%
April 2020
11.8%

Monthly Comparison

April 2019
49.8%
April 2020
11.8%

Yearly Comparison

“This dramatic drop is attributed to the toll the coronavirus has taken on small businesses and the economy overall,” Arora said.

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Institutional lenders approved 22.6% of applications for funding in November, slightly up from 22.5% in October.

March 2020
41.2%
April 2020
18.1%

Monthly Comparison

April 2019
65.3%
April 2020
18.1%

Yearly Comparison

“Institutional lenders are looking for yields, so they are willing to provide funding, as are alternative lenders, such as FinTech companies. Despite these two small bright spots, companies seeking capital are having a tough time securing it. Business owners are looking to the government for help,” Arora said.

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Loan approval rates among alternative lenders rose slightly from 23.3% in October to 23.4% in November. These figures again shine light on the challenges for small companies in search of capital. Last November, institutional lenders approved nearly two-thirds (66.1%) of their funding requests, and alternative lenders granted 56.3% of their applications.

March 2020
30.4%
April 2020
15.2%

Monthly Comparison

April 2019
57.2%
April 2020
15.2%

Yearly Comparison

Credit unions

Credit unions

Credit unions slipped two-tenths of a percent to a 20.7% approval rate in November from 20.9% in October. A year ago, they approved almost 40% of the applications they received in November 2019.

March 2020
23.2%
April 2020
18.1%

Monthly Comparison

April 2019
40.1%
April 2020
18.1%

Yearly Comparison

View Past Months

Access Archives

August 2021

Biz2Credit Small Business Lending Index™ for August Finds Loan Approval Rates Rise at Banks and at Non-Bank Lenders

View Report
July 2021

Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates Rose at Banks and at Institutional and Alternative Lenders in July 2021

View Report
June-2021

Biz2Credit Small Business Lending Index™ Finds June 2021 Loan Approval Rates Increased for All Categories of Lenders

View Report
May-2021

Now That PPP Lending Has Ended, Biz2Credit Small Business Lending Index™ Finds May 2021 Loan Approval Rates Increase for Banks and Non-Bank Lenders

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.