Small Biz Loan Approval Rates at Big Banks and Institutional Lenders Continued Surge in September, 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 September 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 23.4% in September, up one-tenth of a percent from August's figure. It marked the seventh time in the last eight months that lending approval rates increased at big banks.
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"The Federal Reserve failed to increase the interest rates that banks and other lending institutions were hoping for".
Rohit Arora, Biz2Credit CEO
"While the Fed may decide to increase the interest rates at its next policy meeting in November, many banks are lagging behind in their loan goals for 2016. They must close more deals to meet those numbers. I expect big banks to finish strong for 2016, especially if the looming interest rate hike comes to fruition."
Rohit Arora, Biz2Credit CEO
Small Banks
Meanwhile, lending approval rates dropped slightly at small banks to 48.7% last month. It was the first time loan approval rates dropped at small banks in back-to-back months since March 2016.
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"Not enough small banks are digitizing their loan approval process and that is holding them behind". "An interest rate increase would seemingly benefit small banks because right now conventional loan rates are actually lower than SBA-backed loans and that is resulting in lower volume of loan requests for this category of lenders."
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders' loan approval rates improved to an all-time high of 63% in September 2016. It was the third consecutive month that institutional lenders experienced increases in their loan approval rates as they continue to increase market share in marketplace lending.
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"The biggest advantages of institutional lenders are their ability to quickly process loans quickly at affordable terms for the borrower", one of the nation's leading experts on small business finance. "Right now, they are doing it faster and more efficient than anyone on the market. High yields and low default rates are attracting global investors to the marketplace as it is proving to be a hot commodity for investors."
Rohit Arora, Biz2Credit CEO
Alternative lenders
Alternative lenders experienced a decrease in loan approval rates in September, approving 59.7% of loan requests as it continues its downward spiral.
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"Small business owners no longer have to borrow at any cost and typically alternative lenders charge much higher rates". "Alternative lenders have lost much of the competitive advantage they held for so long. As other categories of lenders offer better terms and financing just as quickly, we will see alternative lenders continue to lose market share in loan volume."
Rohit Arora, Biz2Credit CEO
Credit unions
Loan approval rates at credit unions dropped in September to an all-time Index low of 41.3%. However, it was the first time that loan approval rates didn't drop in this category of lenders in over a year.
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"Credit unions are not as relevant as they once were when it comes to small business finance". "They're lagging behind in technology, a mistake in the 21st century, and are becoming an afterthought for borrowers."
Rohit Arora, Biz2Credit CEO
View Past Months
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| March 2021 |
Biz2Credit Small Business Lending Index™ Finds March 2021 Non-PPP Loan Approval Rates Trending Upwards for All Categories of Lenders |
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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 |
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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 |
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.