Small business funding platform Biz2Credit announced on Tuesday the release of its latest Small Business Lending Index, which revealed that the approval percentage for small business loan applications at big banks ($10 billion+ in assets) rebounded from just 8.9% in April to 11.5% in May. Although this is promising, the May 2020 figure is still far below the record high rate in February, pre-coronavirus pandemic. The rates also do not reflect Payroll Protection Program (PPP) loan approval rates; PPP loan approvals are made by the government, rather than by the banks themselves.
Speaking about the results, Biz2Credit CEO, Rohit Arora, stated the more than 2.5% is a “pleasant surprise” for big business banking and towards the end of May, the economy began to rebound after the COVID-19 lockdowns. Employment also dropped from April’s Depression era-levels.
Meanwhile, the approval rate at small banks climbed to 16.9% in May from the disappointing 11.8% in April. Just a few months ago, in February 2020, small business loan approvals were a robust 50.3%. Institutional lenders’ approval percentages bounce back to 21.4% in May, after posting a disappointing 18.1% in April. Loan approval rates among alternative lenders jumped up to 20.5% after falling to just 15.2% in April. Credit unions approved 21.2% of loan requests in May, up from just 18.1% in April.
Biz2Credit further reported that to date, the PPP lending program has provided more than 4.5 million small businesses well over $510 billion in potentially forgivable loans, directly ensuring 50 million American workers keep their jobs. The average loan size is $113,228 and 5,458 lenders are participating in the program, a 200% increase in the number of agency lenders. The platform added:
“According to the Jobs Report issued by the U.S. Bureau of Labor Statistics on Friday, June 5, 2020, non-farm employment rose by 2.5 million in May. Additionally, the unemployment rate declined to 13.3%, reported. These improvements in the labor market reflected a limited resumption of economic activity that was curtailed in March and April due to the coronavirus pandemic. In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade. However, government employment continued to decline sharply.”