Biz2Credit’s Latest Small Business Lending Index Reveals: Loan Approval Rates at Big Banks Reached New Post-Recession High in July 2017

On Tuesday, Biz2Credit announced the release of its latest monthly analysis, which revealed that loan approval rates at big banks ($10 billion-plus in assets) increased to a new post-recession high in July 2017 and the loan approval percentages of institutional investors also set a new record while alternative lenders and credit unions experienced declines in the percentages of funding requests they approved.

According to Biz2Credit, small business loan approval rates at big banks improved two-tenths of a percent to 24.5% in July, setting an all-time Index high. Loan approval rates at small banks also rose two-tenths of a percent in July to 48.9%, up from June’s 48.7% figure. Biz2Credit CEO Rohit Arora, stated:

“Despite the drama surrounding President Trump, the markets are performing well, and the Federal Reserve’s interest rate hikes have not dampened the appetite for small business funding. Overall, I would say that bank lending is stronger now than at any other time since before the Great Recession.”

Institutional lenders’ loan approval rates in July crept up one-tenth of a percent to 63.9%, a new all-time high for the index. Arora explained:

“The dollar is strong, the Dow Jones reached a new high, and the U.S. economy is solid. These factors are attractive for global investors, and they see opportunity in the small business lending space.”

Loan approval rates among alternative lenders continue to plummet; approval rates dropped three-tenths of a percent in July to 57.2%. Approval percentages have dropped every month for more than a year. Arora noted:

“Alternative lenders do play a key role in small business lending. They are a source of funding for borrowers who have had some financial difficulties or perhaps have little to no credit history at all. Alternative lenders are willing to accept the greater risk that comes with less creditworthy borrowers. While there has been consolidation in this category and they are a less attractive option for small business owners, alternative lenders still play an important in small business lending.”

Loan approval rates at credit unions remained at 40.4% for the second consecutive month, equaling the low point for this category of funders on Biz2Credit’s index. Arora added:

“Credit unions cannot keep pace with the banks and other non-bank lenders who have invested in technology and sped up the small business loan-making process. This is an ongoing problem for many credit unions, which are losing their relevance in small business lending.”

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