Small business loan approval percentages at big banks (more than $10 billion in assets) decreased again from 13.1% in September to 13% in October, according to the latest Biz2Credit Small Business Lending Index.

“Small business lending has been on a downward slope in 2023. As expected, acquiring a small business loan from a big bank has become increasingly more difficult with every passing month,” Rohit Arora, CEO of Biz2Credit said. “Small business owners are having better success with smaller banks and/or alternative lenders.”

After a slow start in 2023, small business loan approval percentages at small banks (under $10 billion in assets) rose from 19.3% in September to 19.5% in October. Approval rates at small banks have now increased every month since June.

“Small banks have proven to be quite dependable for borrowers in today’s economic climate,” Arora said. “They’re more focused on SBA lending than the larger banks are, and they are closing more loans.”

The approval rates of Institutional investors also rose from 27.5% in September to 27.6% in October, while approval rates at alternative lenders increased from 29.7% in September to 29.9% in October.

“With the two highest loan approval percentages among the five categories of lenders monitored in the Biz2Credit Small Business Lending Index, institutional investors and alternative lenders have steadily increased in approval rates for well over two years now,” Arora said. “These non-bank lenders have become reliable financing options for small businesses. I do not see that changing anytime soon.”

Approval rates at credit unions returned to their all-time low number of 19.8% in October, dropping from 19.9% in September.

To determine its Small Business Lending Index, Biz2Credit analyzed loan requests from companies in operation for more than two years with 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.