Biz2Credit says loan approvals for small businesses declined in October. The Biz2Credit Small Business Lending Index reports that approval percentages from big banks declined from 14.9% in September to 14.7% in October. This is said to be the lowest percentage since February of this year.
At small banks, approvals declined by not as much. In September, approvals stood at 21.5% versus 21.2% in October
Institutional lenders reportedly approved 25.7% of loan requests in October, a decrease from September’s figure of 26%.
For alternative lenders, approvals fell from 27.5% in September to 27.3% in October, and lending at credit unions remained stagnant at 20.4%.
Rohit Arora, CEO of Biz2Credit, said inflation and uncertainty regarding interest rates have “cast a shadow over small business lending in October.
“Approval percentages at big banks dropped for the fourth consecutive month in October. Likewise, approvals at small banks, which had increased steadily since April 2021, dropped for the first time in well over a year. While monetary policy aims to curb inflation, it hasn’t shown obvious signs of working yet.”
Arora said this is bad news for small businesses in need of funding. Meanwhile, the cost of a loan has gone considerably higher – a “double whammy for business owners.”
Meanwhile, recent data indicates that the unemployment rate has inched up, and job growth appears to be slowing. Most of these jobs are generated by small businesses.
“Inflation is a big concern for small business owners, whose costs continue to rise and eat into profitability. However, the opposite of inflation is a recession, which is also problematic for small companies,” said Arora. “It’s a tough time for small business owners right now.”