Big Banks and Institutional Lenders Hit Record High Small Business Loan Approval Percentages in August

by PaymentsJournal 0

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NEW YORK, Sept. 11, 2018 (GLOBE NEWSWIRE) — Small business loan approval rates for big banks reached another high point in August 2018, according to the Biz2Credit Small Business Lending Index™ released today.

The August approval percentage for big banks (assets of $10 billion+) rose two-tenths of a percent from July’s figure of 26.3% to 26.5%, 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.

“When you combine a strong economy, healthy retail demand, and the willingness of small business owners to reinvest their savings from tax cuts, it creates a positive atmosphere for small business lending. Business owners bullish on the economy,” said Biz2Credit CEO Rohit Arora, who oversees the Index.

“Retail sales are up, and sectors such as transportation, logistics, warehousing, and construction are performing extremely well,” Arora added.

U.S. economic growth was stronger than initially thought in the second quarter, according to a recent report by Reuters and CNBC. In fact, it was the economy’s best performance in nearly four years. Further, the Bureau of Labor Statistics reports that over 200,000 jobs were created in the economy during August. Leading the way in creating new positions were professional and business services, health care, wholesale trade, transportation and warehousing, according to the Sept. 7 Jobs Report.

“Right now, business owners are confident in the future of their firms. August is typically a slow month for loan volume, but that wasn’t the case this year,” Arora said.

Business loan approval rates rose at regional and community banks. Small banks granted 49.8% of the funding requests they received in August, up one-tenth from July. It represents the highest figure for small banks since November 2014.

SBA loans are being made at a strong rate. With a robust economy and government guarantees that mitigate lender to risk, small banks are approving almost half of the loan requests they receive,” Arora explained. “SBA financing is helping startups and growing companies to succeed.”

Institutional lenders remained unchanged at an Index record 64.9%, up one-tenth of a percent from July’s figure.

“Institutional lenders (pension funds, insurance companies, and others), offer interest rates on par with big banks and longer payback periods. They are a good source of capital for small business owners,” Arora said.

Loan approval rates among alternative lenders rose to 56.6%, one-tenth of a percent higher than in the previous month.

“Alternative lenders succeed because they are a source of quick capital when small business owners are in a pinch and cannot get a traditional bank loan,” Arora explained.

Credit unions approved 40.2% of loan applications in August, a slight drop of one-tenth of a percent from July, according to the Biz2Credit Index.

“Credit union lending for small businesses has been stagnant for the past several years,” Arora said. “Their approval percentage today (40.2 percent) is a large drop from their all-time high of 57.9 percent in March 2012, six and a half years ago.”

To view the full index figures and infographics, click here.

About the Biz2Credit Small Business Lending Index
Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s online lending platform, which connects business borrowers and lenders.

About Biz2Credit
Founded in 2007, Biz2Credit has arranged more than $2 billion in small business financing and has several times been named to Crain’s New York’s Fast 50 and was ranked among the top 200 fast-growing companies on Deloitte’s 2017 Technology Fast 500. Biz2Credit is expanding its industry-leading technology in custom digital platform solutions for leading banks and other financial institutions, investors and service providers in the U.S. Visit www.biz2credit.com or follow Biz2Credit on Twitter: @Biz2Credit, Facebook, and LinkedIn.

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