Small Business Loan Approvals Continue to Reach New Heights
Nov 13th, 2019 @ 11:07 AM by Amber Nelson
With a growing economy and an ultra-low unemployment rate, lenders were more willing to approve small business loan applications in October, according to data from Biz2Credit.
“With yet another interest rate cut by the Federal Reserve, small businesses are benefiting from positive economic conditions that are unrivaled in recent times,” said Biz2Credit CEO Rohit Arora. “It has been a very good year for small businesses that are looking for capital, and I don’t foresee any changes during the rest of 2019.”
Among big banks – those with $10 billion or more in assets – the approval rate rose 0.01% to a new all-time high of 28%.
Small banks also increased their small business loan approvals by 0.01% to 20.4% last month. Small banks have much higher approval rates because they are often Small Business Association loan-approve lenders. The reduces much of their risk when making SBA loans.
“Traditional bank loans and SBA loans are available at smaller banks. Because of the overall strength of the economy, greater numbers of businesses qualify for funding,” Arora said. “Having approval rates above the 50% mark is indeed a good sign.”
Institutional lenders approved 66% of all small business applications in October, a slight increase form 65.9% in September.
Approvals finally rose among credit unions as well. They approved 39.8% of applications, up from September’s record low of 39.7%.
“Although the Member Business Lending cap is a hindrance for some credit unions, the bigger problem is that many credit unions are technologically behind banks and alternative lenders.,” Rohit added.
Alternative lenders continued to struggle with their small business loan approval rate slipping to 56.4% in October, from 56.5%. Because alternative lenders specialize in loaning to those who typically wouldn’t qualify for traditional loans, they are seeing greater competition from those traditional lenders because the economy is doing so much better.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.