Loan approval rates at many banks inched upward in September, data from Biz2Credit’s monthly Small Business Lending Index shows. Biz2Credit analyzed loan requests from companies that have been in business for more than two years and who have credit scores greater than 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.
Small business loan approval percentages at big banks, meaning those with at least $10 billion in assets, increased from 13.9 per cent in August to 14 per cent in September. Over the same period, small banks’ approvals also rose to 19.5 per cent from 19.3 per cent. The approval rate at institutional lenders rose from 24.3 per cent in August to 24.5 per cent in September. Over the past year their approval rate has risen 2.3 percentage points. Alternative lenders were slightly freer with the cash, as they approved 25.4 per cent of applications in September, up from 25.2 per cent in August. They also have increased their approval rate by 2.3 points over the past 12 months.
An outlier is credit unions, who approved 20.6 per cent of applications in September, down one-tenth of a per cent from August. In September of 2020 they approved 21 per cent of applications.
“Non-bank lenders are a viable source of funding for companies that need money quickly,” Biz2Credit CEO Rohit Arora said. “Business owners are investing in their companies, and banks are increasingly willing to lend. These are good signs for the small business economy,” Arora added. “Every category of lender, including bank and non-bank lenders, have seen their loan approval percentages rise every month during the past five months.”
Total non-farm payroll employment rose by 194,000 in September, and the unemployment rate declined by 0.4 percentage points to 4.8 per cent, according to a recent Bureau of Labor Statistics report. Notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and in transportation and warehousing. Many of these jobs are created by small businesses.