Online resource for small business finance, Biz2Credit, released its latest Small Business Lending Index on Tuesday, which revealed that small business loan approvals at banks continued to improve. According to the report, small business loan approval rates at big banks ($10 billion+ in assets) improved to a new all-time Index high of 23.3%, up one-tenth of a percent in June.
Biz2Credit CEO Rohit Arora stated:
“Big banks continue their commitment to small business lending. Oil prices are still very low, and people are spending money, which helps the prospects of small business owners looking to grow. We have yet to see any economic fallout from Britain’s decision to leave the European Union. So far, the U.S. markets seem to have rebounded well from the initial shock of the so-called Brexit.”
Biz2Credit also revealed institutional lenders’ loan approval rates dipped slightly to 62.7% in June, down one-tenth of a percent from 62.8% in May. Arora explained:
“Despite this slight drop, look for institutional lenders to grow. With the uncertainty in Europe right now, I expect to see more money coming into the small business lending marketplace from outside the U.S. Domestic investors are looking inward, and the U.S. economy is a safe haven right now. This is good news for small businesses seeking capital for growth. Industries including travel and restaurants are doing quite well at this point. Some food businesses have grown 10 percent in a year. These are solid growth figures.”
Lending approval rates increased slightly at small banks up to 48.8% in June, an increase one-tenth of a percent from May 2016. Arora commented:
“There is confidence in the U.S. economy and it helps small business lending. We are seeing small companies seeking loans to buy commercial real estate and upgrade equipment. A lot of businesses have good cash flow. These are all good signs that encourage small banks — and other financial institutions — to lend.”
Biz2Credit then noted alternative lenders still are approving more than three-out-of-five loan requests on average. In June, lending approval rates inched upward by one-tenth of a percent to 60.1%. Arora said:
“The slow and steady economic recovery has been beneficial to small business owners in many ways. Small business owners with solid credit ratings are able to find good rates and terms and don’t have to borrow at high interest rates. However, for some borrowers, alternative lenders are an important source of capital.”
Biz2Credit then added credit unions have continued their slow decline in loan approval rates, reaching an all-time Index low of 41.6% in June, down one-tenth of a percent from May. Loan approval percentage rates have declined at credit unions every month for more than a year. Arora then stated:
“I don’t foresee a turnaround by credit unions coming anytime soon.”