Small Business Loan Approvals Dropped at Big Banks, Rose at Small Banks and Alternative Lenders in October 2023: Biz2Credit Small Business Lending Index™
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Total nonfarm payroll employment increased by 150,000 in October, and the unemployment rate changed little at 3.9%, according to Jobs Report released by the U.S. Bureau of Labor Statistics on Friday, Nov. 3. Job gains occurred in health care, government, and social assistance. Employment declined in manufacturing due to strike activity. Many of these jobs are created by small businesses.
To determine its Small Business Lending Index, Biz2Credit analyzed loan requests from companies in operation for more than two years with credit scores above 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's platform. To view the October 2023 Index, click here.
“Small business lending has been on a downward slope in 2023. As expected, acquiring a small business loan from a big bank has become increasingly more difficult with every passing month,” said Rohit Arora, CEO of Biz2Credit, and one of the nation’s leading experts in small business finance. “Small business owners are having better success with smaller banks and/or alternative lenders.”
“Small banks have proven to be quite dependable for borrowers in today’s economic climate,” said Arora. “They’re more focused on SBA lending than the larger banks are, and they are closing more loans.”
“With the two highest loan approval percentages among the five categories of lenders monitored in the Biz2Credit Small Business Lending Index, institutional investors and alternative lenders have steadily increased in approval rates for well over two years now,” Arora added. “These non-bank lenders have become reliable financing options for small businesses. I do not see that changing anytime soon.”
The Report
About Biz2Credit Small Business Lending Index™
The Biz2Credit Small Business Lending Index™ 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 Index™ 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.