Small business funding platform Biz2Credit announced on Tuesday its latest lending index revealed that small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.5% in September to 13.3% in October.
Biz2Credit reported that during the month of October small banks approved 18.4% of funding requests, down one-tenth of a percent September’s figure of 18.5%. Meanwhile, credit unions slipped two-tenths of a percent from 21.0% in September to 20.9% in October. Biz2Credit CEO Rohit Arora, who oversees the monthly research, spoke about the latest update by stating:
“Securing small business funding remains challenging at the moment. Many business owners are refraining from applying for credit because they are unsure if their ‘forgivable’ Paycheck Protection Program (PPP) loans are forgiven. This is a time of great uncertainty for companies from sole proprietors to firms with millions in gross sales,” added Arora, one of the nation’s leading experts in small business finance. “I’ve spoken with numerous business owners who are struggling just to hang on and are likely to go under if they don’t receive a financial lifeline to survive until the pandemic ends.”
Biz2Credit’s report also revealed two categories of lenders rose slightly. Institutional lenders, which approved 22.2% in September jumped to 22.5% in October. Meanwhile, loan approval rates among alternative lenders, also improved from 23.1% in September to 23.3% last month. Arora went on to add:
“Loan activity is starting to come back. Since banks have been cautious, borrowers looked to other sources. Institutional lenders are looking for yields, so they are willing to provide funding, as are the alternative lenders.”