Small Business Loan Approvals Hit Post-Recession High
Aug 31st, 2017 @ 9:13 AM by Amber Nelson
The Biz2Credit Small Business Lending Index showed that big banks (those with $10 billion or more in assets) approved almost a quarter (24.5 percent) of all loans reviews, the highest level since the middle of 2009. Small banks saw an increase in approval rates as well, giving the green light to 48.9 percent of all their applicants in July.
“Despite the drama surrounding President Trump, the markets are performing well, and the Federal Reserve’s interest rate hikes have not dampened the appetite for small business funding,” said Biz2Credit CEO Rohit Arora. Overall, I would say that bank lending is stronger now than at any other time since before the Great Recession.”
Institutional lenders approval rates inched up to an all-time high of 63.9 percent in July from 63.8 percent in June.
“The dollar is strong, the Dow Jones reached a new high, and the U.S. economy is solid. These factors are attractive for global investors, and they see opportunity in the small business lending space,” commented Arora.
Credit unions held steady in July with a 40.4 percent approval rate.
Credit unions cannot keep pace with the banks and other non-bank lenders who have invested in technology and sped up the small business loan-making process,” said Arora. “This is an ongoing problem for many credit unions, which are losing their relevance in small business lending.”
The only group that saw a dip in approval rates were alternative lenders. They okayed 57.2 percent of their applications in July, down from 57.5 percent the month before.
“Alternative lenders do play a key role in small business lending. They are a source of funding for borrowers who have had some financial difficulties or perhaps have little to no credit history at all,” Arora explained.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.