Small Biz Loan Approval Rates at Big Banks and Institutional Lenders Continued Surge in October, According to Biz2Credit Small Business Lending Index
Small banks, Alternative Lenders and Credit Unions Experience Setbacks
Loan approval rates at big banks ($10 billion+ in assets) and institutional lenders improved to all-time highs in October 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, approval rates at small banks, alternative lenders and credit unions all dropped in the last month.
Big Banks
Small business loan approval rates at big banks improved to 23.5% in October, up one-tenth of a percent from September's figure of 23.4%. It marked the seventh time in the last eight months that lending approval rates increased at big banks.
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"Banks want to meet their targets for the year, which means the spigot of small business lending has opened up."
Rohit Arora, Biz2Credit CEO
"If the Fed increases interest rates, as predicted, at its next policy meeting, I expect to see even stronger numbers. Banks will try to fund companies at higher, more profitable rates."
Rohit Arora, Biz2Credit CEO
Small Banks
Meanwhile, lending approval rates at small banks remained flat at 48.7% in October.
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"Small banks are seeking increase their number of closed deals by offering SBA loans. They are feeling the pressure of thee increased activity by big banks and institutional lenders, who are strong competitors". "Smaller banks still are processing more SBA-backed loans than any other type of lender."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders' loan approval rates also climbed to a new Index high of 63.1% in October 2016. It was the fourth consecutive month that institutional lenders improved approval percentages. Institutional lenders continue to increase their share of the small business lending market.
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"Institutional lenders are taking advantage of their ability to process loans quickly at very affordable rates", one of the nation's leading experts on small business finance. "They are faster and more efficient than other categories of lenders. Quite a few of them are foreign-based investors who are nervous about Brexit and hungry for high yields and low default rates."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates at Alternative lenders dipped yet again in October, as they granted 59.5% of loan funding requests they received.
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"Alternative lenders typically charge high rates as a tradeoff for the risk they are assuming in small business loan-making and the speed by which they make funding decisions". "Unless a borrower is perceived high risk, he or she can likely secure better terms from other types of lenders. Borrowers want lower interest rates and longer terms than alternative lenders have been offering."
Rohit Arora, Biz2Credit CEO
Credit unions
Loan approval rates at credit unions dropped in October to yet another Index low of 41.2%.
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"Credit unions are struggling to maintain their relevance in small business lending". "They're becoming an afterthought for borrowers."
Rohit Arora, Biz2Credit CEO
View Past Months
Access Archives
| February 2021 |
Biz2Credit Small Business Lending Index™ Finds Loan Approval Rates in February 2021 Changed Little from January, But Dropped Dramatically from February 2020 |
|
As Small Business Businesses Apply for PPP Funding, Approval Percentages for Traditional Loans Plummet |
| View Report |
| January 2021 |
Biz2Credit Small Business Lending Index™ Reports Loan Approval Rates at Banks Increased Slightly in January 2021, But Are Down More Than 50% from One Year Ago |
| View Report |
| 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 |
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.