Big Banks Hit Record High Small Business Loan Approval Percentages in October, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Loan application volume and approvals rise for banks, institutional lenders and alternative lenders.
ahrefstartSmall business loanahrefend aapproval rates for big banks reached another record high in October 2018, according to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend released today.
Big Banks
The October approval percentage for big banks (assets of $10 billion+) rose two-tenths of a percent from September's figure of 26.7% to 26.8%, according to Biz2Credit's monthly report, which examines more than 1,000 credit applications made by small businesses via the company's online lending platform.
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Optimism among entrepreneurs is high, according to the ahrefstartNFIB Small Business Optimism Indexahrefend, which has had a two-year upward trend. According to the NFIB, 2018 has produced 45-year record high measures of job openings, actual job creation, compensation increases, profit growth, and inventory investment. Further, capital spending has risen significantly in the past few month and small business owners have bulked up their inventories.
Rohit Arora, Biz2Credit CEO
Hiring is up, and much of that is due to small business growth. Nonfarm employment rose by 250,000 in October, and the unemployment rate remained unchanged at 3.7 percent, according to The Bureau of Labor Statistics' ahrefstartNovember 2 Jobs Reportahrefend. Sectors that saw the largest job growth were health care, manufacturing, construction, and transportation and warehousing.
"While there were some fluctuations in the stock market during October, the economy is still very strong," , who oversees the Index. "There is still much optimism among small business owners, and they are anticipating a strong holiday season. All these factors combine for a robust small business lending market right now"
Rohit Arora, Biz2Credit CEO
Small Banks
Business loan approval rates rose at regional and community banks. Small banks actually granted more than half of the funding requests they received in October, 50.1% up two-tenths from September. It was the first month in which small banks approved more loans than they rejected since October 2014. "In October 2018, the first month of SBA's 2019 Fiscal Year, the agency guaranteed almost $2.5 billion in small business loans nationwide. In the New York District, that number was $84.3 million, or 16 percent more than last October," said Beth Goldberg, Director of the New York District SBA Office which serves all of New York City, Long Island and the Lower Hudson Valley.
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"Small banks are granting ahrefstartSBA loansahrefend at a great pace. By providing government guarantees against default and mitigating lender risk, the agency is providing incentives for banks to lend and opportunities for small business owners to secure capital,"
Rohit Arora, Biz2Credit CEO
Institutional lenders
institutional lenders jumped from 64.5% to 64.8% in October.
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"The rising tide floats all the boats. Institutional lenders, like the banks, are funding deals at a high rate,"
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates among alternative lenders increased from 56.6% in September to 56.8% in October.
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"Alternative lenders provide quick funding for companies that might not qualify for traditional bank loans," Arora explained. "While their interest rates are high, the capital they provide is often a lifeline for a cash-strapped company. There will always be a marketplace for this type of lending."
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions approved 40.3% of loan applications in October, the same percentage as in September, according to the Biz2Credit Index.
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"Thus far, 2018 has been one of the best ever for small business lending. As long as the economy remains strong and interest rates stay reasonable, I expect small business lending to be robust as we approach 2019,"
Rohit Arora, Biz2Credit CEO
View Past Months
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| 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 |
| View Report |
| 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 |
| 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.