Small Business Loan Approvals at Big Banks Hit New Record in September, According to Biz2Credit Small Business Lending Index™
Biz2Credit Small Business Leading IndexTM
Small Business Loan Approvals at Big Banks Hit New Record in September
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Big Banks
Approval rates for small business loan applications rose to another post-recession record (27.9%) at big banks ($10 billion+ in assets), while approval percentages also stayed above 50% at small banks in September.Meanwhile, the Labor Department’s Jobs Report released on October 4, reported that nonfarm payroll employment rose by 136,000 jobs in September, and the unemployment rate hit a 50-year low of 3.5%. Employment in health care and in professional and business services continued to trend upwards, according to the U.S. Bureau of Labor Statistics.
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“Bank lending to small businesses remains strong at big banks and regional and community banks. With the recent Fed announcement that interest rates will drop, I expect it will continue to grow for the rest of 2019,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research derived from more than 1,000 small business credit applications on his company’s online lending platform.
Rohit Arora, Biz2Credit CEO
Small Banks
Small bank approvals of small business loan applications in September remained at 50.3%.
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“Traditional bank loans and SBA loans are available at smaller banks. Because of the overall strength of the economy, greater numbers of businesses qualify for funding,” Arora explained. “Having approval rates above the 50% mark is indeed a good sign.”
Rohit Arora, Biz2Credit CEO
Institutional lenders
Institutional lenders’ approval rates again rose one-tenth of a percent to 65.9% from August’s figure of 65.8%.
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“Institutional lenders are a good source of small business loans and have been for the past several years,” Arora said.
Rohit Arora, Biz2Credit CEO
Alternative lenders
Small business loan approval rates among alternative lenders slipped one-tenth of a percent to 56.5% from 56.6% in August.
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“Non-bank alternative lenders are a viable funding source for companies whose credit scores do not qualify them for traditional bank loans,” Arora said. “Even as bank lending shows growing strength, alternative lenders are valuable as a funding source to many small business owners – especially ones who have credit scores of 650 or less.
Rohit Arora, Biz2Credit CEO
Credit unions
Credit unions’ approval rates fell to 39.7% in September, slipping from the 40% mark in August. The figure is a record low for since Biz2Credit began analyzing business loan approval percentages in 2011.
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“Other categories of lenders are all moving to digital applications. I would say that credit unions have lost their way in small business lending in today’s low interest rate environment,” said Arora, who oversees the Biz2Credit research. “Certainly, the Member Business Lending cap (12.25% of their assets) does not help. Meanwhile, banks, institutional lenders and alternative lenders are much more aggressive in small business lending.
Rohit Arora, Biz2Credit CEO
View Past Months
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| 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 |
| 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 |
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.