Government Shutdown Halts Small Business Lending: Biz2Credit Small Business Lending Index for Oct. 2013 Reports Significant Drop in Loan Approval Rates at Banks

Small Bank Approval Rates Fall Below 50%, Alternative Lending Thrived as Borrowers Scrambled for Capital in October

NEW YORK, NY, November 12, 2013 - The government shutdown in October had a significant negative impact on small business lending, according to the ahrefstartBiz2Credit Small Business Lending Indexahrefend, a monthly analysis of 1,000 loan applications on Biz2Credit.com.

Big Banks

Big Banks

Small business loan approvals at big banks ($10 billion+ in assets) dropped to 14.3% in October 2013, which is nearly 20 percent lower than its loan approval rates of 17.5% in September 2013. Additionally, loan approval rates at small banks dropped from 50.1% in September to 44.3%, which marks the lowest approval rate since August 2011.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"SBA loan approvals stalled because the agency was not working for three weeks. Similarly, non-SBA could not be processed during the government shutdown because the IRS was shut down."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"Banks could not acquire income verification from the IRS during the shutdown, which is needed to approve many loan requests." "A major backlog of SBA loans from the shutdown will take months to process, and the debt ceiling debate could negatively impact small business lending even further in the coming months."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

Alternative lenders

Alternative lenders

Meanwhile, alternative lenders seized the opportunity and picked up the slack in small business lending. Approval rates by alternative lenders increased to an Index high 67.3% in October 2013, up from 63.2% the previous month.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Small business owners were desperate for capital during the shutdown and turned to alternative lenders, who were willing and able to provide money, but at a much higher interest rate than a bank or credit union would charge". "The stop in the flow of capital came at a time of year when small businesses traditionally search for funding. The economy, which is still in the weak recovery phase, simply cannot sustain this kind of disruption."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Further, credit unions, which had been on the lending rebound prior to the government shutdown, experienced a 4% decrease in approval rates in October 2013. Lending approval rates at credit unions fell to an all-time Index low of 43.4% in October from 45.40% in September.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

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.