Biz2Credit announced on Tuesday its latest Small Business Lending Index revealed the approval percentage for small business loan applications at big banks ($10 billion+ in assets) rose one-tenth of a percent to reach 28.3% in January 2020.
According to the Index, the approval rate at small banks dipped two-tenths of a percent from 50.6% in December to 50.4% in January. Biz2Credit CEO, Rohit Arora, stated:
“The economy is strong, and optimism among small business owners is high, which creates a fertile atmosphere for small business lending. Interest rates remain low, which is encouraging to small companies seeking debt financing for their growth plans. The bottom line is that if your business performed well in the past two years, banks will be willing to lend.”
The Index also revealed institutional lenders’ approval rates rose two-tenth of a percent from December’s figure of 66.2% to 66.4% while small business loan approval rates among alternative lenders dipped from 56.3% in December 2019 to 56.1%. The approval percentage rate for credit unions reached a new record low of 39.6% in January, down one-tenth of a percent from December. Rohit further explained:
“Credit unions are struggling in small business lending. There is no doubt that they must change the way they conduct business and upgrade their technology or partner with fintech firms. Otherwise, I can’t see them surviving. Credit unions should be able to process digital loan applications to keep up with the current lending marketplace.”
Biz2Credit added its analyzed loan requests from companies in business for more than two years with credit scores above 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s platform.