Small business funding platform Biz2Credit announced on Tuesday its latest Small Business Lending Index has been released and revealed small business loan approval percentages at big banks ($10 billion+ in assets) and small banks dropped slightly in August 2020, an indication that the upward trend that began in May has plateaued.
Biz2Credit reported that in August, big banks granted only 13.6% of the loan applications they received, compared to 13.8% in July. Similarly, small banks approved 18.5% of funding requests, a small dip from 18.6% the previous month. It was noted that the latest index’s figures do not reflect the approval of Paycheck Protection Program (PPP) loans that are made by the government, rather than by the banks themselves. PPP lending ended on August 8 after providing nearly 5 million small businesses with an infusion of much-needed cash, which will likely be “forgivable loans” in most cases. Speaking about the latest Index’s information, Biz2Credit CEO Rohit Arora, stated:
“PPP loans came to a halt on August 8, and it has been tough to secure traditional small business funding in the coronavirus era. Big banks hit a record low approval rate of 8.9% in April and were slowly rebounding, but the curve flattened last month.”
The Index also revealed loan approval rates among alternative lenders dropped a notch from 23.1% last month to 23.0% in August. Likewise, credit unions also slipped one-tenth of a percent from 21.2% in July to 21.1% this month. Institutional lenders were the only category of lender that saw an uptick in approval percentages during August, as approvals rose from 21.9% in July, up from 22.0% in August.