Biz2Credit Small Business Lending Index Reports Loan Approval Rate Increase

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NEW YORK, NY (Press Release – Feb. 9, 2012) – The Biz2Credit Small Business Lending Index, an analysis of 1,000 loan applications on Biz2credit.com, found that approval rates of small business financing requests in January by small banks and non-bank lenders increased to their highest levels in the past 12 months. Meanwhile, lending at big banks jumped two percentage points over December’s rate to 11.7%, the highest rate since February 2011.

The big trend in small business lending continues to be the rise of alternative lenders: Community Development Financial Institutions (CDFI), Accounts Receivable financers, merchant cash advance, micro lenders, and others. In January, these institutions approved 62.4% of the funding requests, up from 62.2% of funding requests in December.

As a category by themselves, credit unions, which have become increasingly active in small business lending, granted 57.6% of small business funding requests, a rise from the 57.4% approval rate in December 2011.

Loan approvals by small banks increased to 47.5% in January 2012, up from 47.1% in December, to reach their highest rate in the past year.

Approvals by large banks rose to 11.7%, the highest percentage since Feb 2011, when 11.9% of small business loans were granted.

Month 2011

Big Bank ($10B+ assets) Approval %

Small Bank Approval %

Credit Union Approval %

Alternative Lenders

Approval %

January

12.8%

43.5%

48.9%

49.3%

February

11.9%

43.9%

49.1%

51.6%

March

11.6%

44.2%

48.8%

51.9%

April

10.4%

44.6%

50.1%

53.6%

May

9.8%

45.0%

51.2%

53.8%

June

8.9%

42.5%

52.3%

54.9%

July

9.8%

44.9%

53.4%

52.2%

August

9.4%

43.8%

54.2%

58.0%

September

9.2%

45.1%

55.5%

61.5%

October

9.3%

46.3%

56.6%

61.8%

November

10.0%

47.0%

57.0%

62.0%

December

9.7%

47.1%

57.4%

62.2%

January 2012

11.7%

47.5%

57.6%

62.4%

“Optimism seems to be returning. We have seen 35% increase in month-to-month volume of new loan applications, which is a good sign,” said Biz2Credit CEO Rohit Arora, named “Top Entrepreneur of 2011” by Crain’s New York Business and one of the country’s top experts on small business finance. “The strong holiday sales combined with latest jobs report showing that the U.S. unemployment rate fell to 8.3% in January — its lowest level in 2 1/2 years — indicates that brighter days may be ahead.”

With entry of bigger players in alternative financing , the cost of funding in this asset class has begun to drop from an average 27- 28% to 16-18%. Biz2Credit sees a trend of more players joining alternative funding space thus driving up competition and lowering overall barriers to credit access and lower interest rates.

“There is an increase in startups looking for funding, and many of their needs are not fully addressed by traditional lending institutions,” added Arora.

Biz2Credit also has found that banks with assets between $10- $50 billion are starting to come back in the market, albeit cautiously. They are continuing to monitor the European financial crisis, as well as the U.S. debt debate.

Additionally, toward the end of 2011, big banks tried to shore up their capital base and thus tried to reduce their outstanding loan portfolio.

Biz2Credit’s analysis also found that loan request amounts ranged from $25,000 to $3 million; that the average credit score was above 680, and that average-time-in-business was slightly more than two years.

Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s online lending platform.

About the Biz2Credit Small Business Lending Index

The Biz2Credit Small Business Lending Index differs from other indices by analyzing required information (primary data) submitted by small business owners applying for financing through Biz2Credit’s online platform, which connects borrowers with more than 1,100 lenders nationwide.

About Biz2Credit

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers, and complementary business tools. The company matches borrowers to financial institutions based on business’ unique profile — completed in less than four minutes — in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Having secured more than $500 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 credit resource for small businesses.

3 Comments ▼

Marie Hernan


Marie Hernan

3 Reactions

  1. I am a small “Private” owned business – AJ’s Loving Care. I specialize in taking care of the elderly in their, homes, assisted living facilities, nursing homes, etc. I have been in business for about three years with very little marketing tools. My clientel is always through “Word-of-mouth.” I would be interested in getting more information concerning securing a small business loan for, marketing, office space, etc. Any information would be appreciated.

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