Small Business Loan Approval Rates at Banks Declined in October 2020: Biz2Credit Small Business Lending Index™

Small Businesses Capital Is Hard to Secure

Small business leading

Biz2Credit Small Business Leading IndexTM

Small Business Loan Approval Rates at Banks Declined in October 2020

Big Banks

Big Banks

Small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.5% in September to 13.3% in October, demonstrating the challenges of small business owners searching for capital, according to the latest Biz2Credit Small Business Lending Index™ released today. “This is a time of great uncertainty for companies from sole proprietors to firms with millions in gross sales,” added Arora, one of the nation’s leading experts in small business finance. “I’ve spoken with numerous business owners who are struggling just to hang on and are likely to go under if they don’t receive a financial lifeline to survive until the pandemic ends.” The U.S. Bureau of Labor Statistics’ Jobs Report on Friday, November 6, found that nonfarm payroll employment rose by 638,000 in October, and the unemployment rate declined to 6.9%. These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it, according to the Labor Department. In October, notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and construction. Many of those jobs are created by small businesses. “Despite these figures, small business owners are still very worried. States like New Jersey and Connecticut are looking at putting greater restrictions on the operations of restaurants and other businesses,” Arora said. “Until the virus is under control, small businesses will continue remain in a state of limbo.”

March 2020
15.4%
April 2020
8.9%

Monthly Comparison

April 2019
27.5%
April 2020
8.9%

Yearly Comparison

“Securing small business funding remains challenging at the moment,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “Many business owners are refraining from applying for credit because they are unsure if their ‘forgivable’ Paycheck Protection Program (PPP) loans are forgiven.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

Small banks approved 18.4% of funding requests, down one-tenth of a percent September’s figure of 18.5%.

Sep-20
18.5%
Oct-20
18.4%

Monthly Comparison

Oct-20
50.4%
Oct-20
18.4%

Yearly Comparison

Institutional lenders

Institutional lenders

Institutional lenders, which approved 22.2% in September jumped to 22.5% in October

Sep-20
22.2%
Oct-20
22.5%

Monthly Comparison

Oct-19
66.0%
Oct-20
22.5%

Yearly Comparison

“Loan activity is starting to come back. Since banks have been cautious, borrowers looked to other sources,” Arora said. “Institutional lenders and looking for yields, so they are willing to provide funding, as are the alternative lenders.”

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

Alternative lenders, improved from 23.1% in September to 23.3% last month

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 from 21.0% in September to 20.9% in October.

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

March 2021

Biz2Credit Small Business Lending Index™ Finds March 2021 Non-PPP Loan Approval Rates Trending Upwards for All Categories of Lenders

PPP Lending Still Dominates Small Business Loan-Making in March 2021

View Report
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

Approval percentages for all categories of lenders dropped more than 50% from December 2019

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.