Big Banks Hit Record High Small Business Loan Approval Percentages in September, According to Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend
Loan application volume and approvals rise at banks, both large and small
ahrefstartSmall business loanahrefend approval rates for big banks reached another high point in September 2018, according to the Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend released today.
Big Banks
The September approval percentage for big banks (assets of $10 billion+) rose two-tenths of a percent from August's figure of 26.5% to 26.7%, 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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"There was a lot of pent up demand in the marketplace. With the continuous rate hikes by the Federal Reserve, banks are making more money when they lend because their spreads are up," said Biz2Credit CEO Rohit Arora, who oversees the Index. "Additionally, there is demand in secondary market for these loans. People are trying to borrow money now before the rates go up further."
Rohit Arora, Biz2Credit CEO
"Overall economic factors come into play. The unemployment rate declined by 0.2 percentage point to 3.7 percent in September, according to The Bureau of Labor Statistics' ahrefstartOctober 5 Jobs Reportahrefend . The Labor Department also reported that 134,000 jobs were created in the economy during September. The biggest job gains occurred in professional and business services, in health care, and in transportation and warehousing.
Arora believes the strong dollar, surging stock market, and general optimism among small business owners account for the robust small business lending atmosphere.
"American small businesses generally are not export-focused. When the local economy does well, the small businesses do well,"
Rohit Arora, Biz2Credit CEO
Small Banks
Business loan approval rates rose at regional and community banks. Small banks granted 49.9% of the funding requests they received in September, up one-tenth from August. It represents the highest figure for small banks in four years, since October 2014.
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"Small banks are processing record numbers of ahrefstartSBA loansahrefend . With a solid economy and the SBA's government guarantees that mitigate lender risk, small banks now are approving roughly half of the loan requests they receive,"
Rohit Arora, Biz2Credit CEO
Institutional lenders
institutional lenders slipped from an Index record 64.9% to 64.5% in September. After more than two years of steady increases, approval percentages slipped for the first time since June 2016.
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"Intensified competition from banks and increasing interest rates have negatively impacted the approvals by institutional lenders, but they are still performing very well,"
Rohit Arora, Biz2Credit CEO
Alternative lenders
Loan approval rates among alternative lenders remained at 56.6%.
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"Alternative lenders - factors, cash advance companies, etc. - are not for everyone, especially at a time when the banks have opened their purse strings," . "They do provide a lifeline to companies that are in a bind and may not qualify for funding from traditional sources. Thus, alternative lenders will continue to do well even as competition has intensified among banks."
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions approved 40.3% of loan applications in September, a slight increase of one-tenth of a percent from August, according to the Biz2Credit Index.
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Overall, I would say that this positive lending atmosphere will last until interest rates go up another 50 to 75 basis points," . "Next year, the impact of the tax cuts may slow a bit. At some point, lending will start weakening, but probably not until middle to late 2019.
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 |
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As Small Business Businesses Apply for PPP Funding, Approval Percentages for Traditional Loans Plummet |
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| 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 |
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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 |
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| 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 |
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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.