SBA Lending Helps Fuel New Highs in Loan Approval Rates for Small Business

SBA Lending Helps Fuel New Highs in Loan Approval Rates for Small BusinessSmall business loan approval rates at big banks ($10 billion-plus in assets) increased to a new high of 17.8 percent in January 2014, up from 17.6 percent in December 2013, according to Biz2Credit‘s monthly analysis of 1,000 loan applications.
Year-over-year, lending approval rates at big banks have increased more than 15 percent.
Small business loan approvals at small banks reached a new benchmark of 50.9 percent in January 2014, up from 48.7 percent in the previous month.  Approval rates at small banks are up by 2 percent year-over-year.
“SBA (Small Business Administration) lending has picked up considerably over the last month,” said Biz2Credit CEO Rohit Arora, who oversaw the research.  “The increase in popularity over the last month in SBA lending accounts for the rise in approval rates at small banks, which rely heavily on the SBA Express program (loans less than $350,000) and SBA 7(a) program (loans between $350,000 – $5 million).”
Meanwhile, credit unions continuing a slide in approvals, with rates dipping to an all-time low of 43.4 percent in January from 43.9 percent in November.  Moreover, lending approval rates by credit unions has declined in 16 of the last 20 months and is down nearly 25 percent in that 20-month period.
Alternative lenders, which emerged as important players in small business lending in 2013, saw a drop-off in approval rates from 67.3 percent in December to 64.1 percent in January 2014.
“Increasingly, creditworthy borrowers are applying for small business loans at big banks and having them approved,” explained Arora. “Big banks, which request proof of three years of profitability, are now receiving applications from companies whose fortunes increased from 2011-2013.”
Institutional Lenders, a new category in the Biz2Credit index, approved 56.5 percent of the funding requests they received. This category of lenders includes credit funds, insurance companies, family funds, and “other yield-hungry, non-bank financial institutions that typically offer more competitively priced loan options than alternative lenders in amounts up to $1 million,” Biz2Credit says.
SBA Lending Helps Fuel New Highs in Loan Approval Rates for Small Business

Leave a Reply

Your email address will not be published. Required fields are marked *