Biz2Credit Small Business Lending Index ™ Shows Acceleration of Loanstweet
Big banks are approving small business loans at record rates, according to the latest Biz2Credit Small Business Lending Index ™, which tracks loan approval rates of big banks, small banks, institutional lenders (which also set a new high), alternative lenders and credit unions.
Biz2Credit CEO Rohit Arora, one of the nation’s leading experts in small business lending, oversaw the research. He believes lending has been spurred by:
- Overall optimism in the economy
- Entrepreneur willingness to take risks — because of the solid economy and the strength of their tax returns filed in April
- Bank willingness to lend – spurred in part by higher interest rates and the possibility of another increase
- Growth of industries such as logistics, food and IT
NEW YORK, NY, September 12, 2017 — Loan approval rates at big banks ($10 billion-plus in assets) hit another post-recession high in August 2017, according to the latest Biz2Credit Small Business Lending Index ™, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors also set a new record.
Small business loan approval rates at big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index. Similarly, approval percentages at small banks also rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure.
“It’s a good time for bank lending; the big banks are approving nearly a quarter of the loan requests they receive from small businesses while the smaller banks are granting almost half of the funding applications they receive,” explained Biz2Credit CEO Rohit Arora, who oversaw the research. “The economy is holding up well: the job market is strong, oil prices are still relatively low, and home values have gone up, which makes entrepreneurs feel more secure and confident.”
Institutional lenders’ loan approval rates in August remained at 63.9%, the all-time high for the Biz2Credit Small Business Lending Index.
“The dollar is strong, and there is also hope that President Trump’s promised tax cuts will pass and spur more economic growth,” added Arora, one of the country’s leading experts in small business finance. “With interest rates up a bit, it’s profitable for lenders to close deals. Thus, bank lending is as strong as it has been the mid-2000s. Despite the daily drama in Washington, global growth has picked up, and the U.S. economy seems to be on solid footing.”
Loan approval rates among alternative lenders continue to decline; approval rates dipped one-tenth of a percent in August to 57.1%. Approval percentages have dropped every month for more than a year.
“Alternative lenders still are players in small business lending because they are willing to provide funding for borrowers who have less than stellar credit or little credit history at all,” Arora explained. “Since they accept higher risk by funding borrowers who do not have stellar credit histories, alternative lenders charge at a higher cost of capital.”
Loan approval rates at credit unions dipped a notch to 40.3% in August, thereby reaching a new low for this category of funders on Biz2Credit’s index.
“Credit unions continue to lose their relevance in small business lending because they have not invested in technology and are often slow in their deal-making,” Arora explained. “Further, the credit union member business-lending (MBL) cap has not risen above 12.25% of assets. This remains an ongoing issue.”
To view the August 2017 and historic figures, click HERE.
About the Biz2Credit Small Business Lending Index
Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s online lending platform, which connects business borrowers and lenders.
Founded in 2007, Biz2Credit has arranged more than $1.7 billion in small business financing and was recently named to Crain’s New York’s Fast 50 and the top 150 of fast-growing companies on Deloitte’s 2016 Technology Fast 500.Biz2Credit is expanding its industry-leading technology in custom digital platform solutions for leading banks and other financial institutions, investors and service providers in the U.S. Visit www.biz2credit.com or follow Biz2Credit on Twitter: @Biz2Credit, Facebook: www.facebook.com/biz2credit and LinkedIn: https://www.linkedin.com/company/biz2credit-llc.
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