Biz2Credit announced on Tuesday its latest Small Business Lending Index reported small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.2% in November to 13.1% in December, an indication that the challenges for small business owners in need of financing continue. In comparison, big banks approved 28.2% of the funding requests they received in December 2019.
Biz2Credit further revealed that during December, small banks approved 18.2% of business financing applications, down one notch from 18.3% the month before. In sharp contrast, small banks granted more than half (50.6%) of funding requests last December. The news comes as applications for the second round of the Paycheck Protection Program (PPP) begins accepting new applications this week from a select group of the smallest lenders in the SBA’s approved lender list.
The report then shared that similarly, credit unions slipped one-tenth of a percent to a 20.6% approval rate in December from 20.7% in November. A year ago, they approved almost 40% of the applications they received in December 2019.
“Two categories of lenders rose slightly in December. Institutional lenders approved 22.8% of applications for funding in December, slightly up from 22.6% in November. Meanwhile, loan approval rates among alternative lenders rose slightly from 23.4% in November to 23.5% in December. These figures again shine light on the challenges for small companies in search of capital. Last December, institutional lenders approved nearly two-thirds (66.2%) of their funding requests, and alternative lenders granted 56.3% of their applications.”
Speaking about the report, Rohit Arora, CEO of Biz2Credit, added:
“Despite these two small bright spots, companies seeking capital are having a tough time securing it. Right now, business owners are looking to the government for help, but not all of them qualify for PPP. Although representatives of the SBA said today that the lending pool for PPP2 should be enough to cover the qualified borrowers who apply, it’s likely that many business owners will still require a lot of capital even beyond PPP loans. They don’t currently have options because lenders are approving so few regular loan applications.”