Small-Business Loan Approvals Improving at Smaller Banks

Small-Business Loan Approvals Improving at Smaller BanksLoan approval rates for small businesses by small banks jumped for the fourth straight month in March, reaching a new high of 50.8 percent, according to the index from Biz2Credit.
Its monthly analysis of 1,000 loan applications showed an improvement from the 50.3 percent mark in February 2013. The year-over-year comparison shows a bigger increase from the March 2012 figure of 47.6 percent. Small banks are defined as having less than $10 billion in assets.
However, small-business loan approval rates at big banks (with $10 billion or more in assets) decreased slightly in March 2013 to 15.7 percent, down from the 15.9 percent rate in February.
Despite the drop at big banks last month, approvals by these larger institutions are up 44 percent from the March 2012 figure of 10.9 percent.
Smaller banks are becoming more aggressive in their SBA (Small Business Administration) lending, especially via the SLA and SBA Express program loans, said Biz2Credit CEO, Rohit Arora who oversaw the research.
“While big banks have been steadily approving more applications in recent months, uncertainty in the economy is preventing higher rates of approval,” he said. “Bigger banks are more impacted by external issues, such as the budget Sequester.”
Credit union approvals of small business loans dropped for the tenth consecutive month to 45.5 percent, down from 45.9 percent in February.
Approvals by credit unions have dipped 21.4 percent in a year’s time, falling to a new low for the Biz2Credit lending index.
“Credit union lending has visibly lagged in recent months, despite its boom a year ago.  As banks have returned to the small business credit market, the better qualified loan seekers are applying to banks for funding, thereby leaving credit unions with riskier candidates,” Arora said.
Small-Business Loan Approvals Improving at Smaller Banks
* Banks with more than $10 billion in assets are classified as “big banks.”
* Banks with less than $10 billion in assets are classified as “small banks.”
* Credit Unions are considered a category unto themselves in the Biz2Credit Small Biz Lending Index.
* “Alternative lenders” include accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others.

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