Small Business Loan Approvals Top Record Highs Again
Dec 18th, 2019 @ 9:53 PM by Amber Nelson
Big and small U.S. banks approved record numbers of small business loans in November, according to data from Biz2Credit, an indication of the continued strength of the economy.
Last month, big banks ($10 billion+ in assets) approved 28.1% of all small business applications, up from the previous high of 28.0% in October.
The small business loan approval rate among small banks also inched up, to 50.5% in November from 50.4% the month before.
Institutional lenders approved 66.1% of all small business loan applications they received, up slightly from 66.0% in October.
Total approved Small Business Administration (SBA) loans rose to 63,000 worth $28 billion during the 2019 fiscal year.
“Interest rate cuts by the Federal Reserve, optimism among small business owners, and an overall strong economy account for an incredibly strong for small business lending,” said Biz2Credit CEO Rohit Arora. “If you are a small business owner considering investing money in your firm, you may not see a time better than now.”
Not all lenders have been able to keep pace with small business loan approvals, however. Alternative lenders, that usually appeal to those with lower credit scores or fewer assets, are facing tougher competition by small banks. Their approval rating slipped to 56.3% in November from 56.4% a month before.
Credit unions also struggled to increase their small business lending. They approved just 39.8% last month, unchanged from the month before cut close to the record low from September 2019.
“Credit unions are in danger of becoming irrelevant in small business lending. Some of them are making investments into digital technology so that they can process online loan applications, but many of them have not. They are falling behind as a category of lenders for this reason. Credit unions are technologically behind banks and other lenders, some of them may not be able to survive unless they partner with FinTech platforms that can provide digital capabilities.”
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.