Biz2Credit: Small Business Loan Approval Rates Increase at Banks in July
AUG 11, 2021 - 6:42 am
According to Biz2Credit’s latest Small Business Lending Index, small business loan approval percentages at big banks (more than $10 billion in assets) jumped from 13.6% in June to 13.8% in July, reaching the same percentage as last July. Meanwhile, small banks’ approval rates also rose, climbing from 18.9% in June to 19.1% in July. The approval percentage at small banks was up one-half of a percent from last July.
“Overall, the economy has rebounded fairly well, and many small businesses are again investing in their companies,” Rohit Arora, CEO of Biz2Credit, said. “Approval rates increased both at big banks and at smaller banks, including regional and community banks that increasingly are partnering with fintechs to digitize the small business loan application process.
“Big banks remain comparatively stingy in their small business loan-making. This is opening up opportunities for smaller banks and alternative lenders to gain market share.”
Institutional lenders approved 23.9% of small business loans in July, up one-tenth of a percent from 23.8% of funding requests in June and up two full percentage points from one year ago. Meanwhile, alternative lender approval rates rose two-tenths of a percent from 24.5% in June to 24.7% in July. Last year, the July percentage for alternative lenders was 23.1%. Credit unions approved 20.5% in July, the same percentage as the month prior but down from 21.2% in July 2020.
“Non-banks lenders are a viable source of capital for small business owners, including women-owned and minority-owned businesses,” Arora said. “Non-bank lenders typically focus less on FICO scores and more on the financial health of the borrowers who are applying for funding.”
Biz2Credit analyzed loan requests from companies in business more than two years with credit scores of more 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.
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