NEW YORK, NY, May 6, 2014 – Small business loan approval rates at big banks ($10 billion+ in assets) rose to 19.4% in April 2014, up from 18.8% in March, and a record high for the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com.
“In April, small business owners submit their tax filings, and banks use that data in making their lending decisions,” explained Biz2Credit CEO Rohit Arora, one of the nation’s leading experts in small business lending. “The economy is steadily improving, and established businesses are returning to the credit marketplace. They are able to get money from big banks that offer attractive rates. This is a very strong trend.”
“There was a lot of pent up demand in the marketplace. Retailers are buying inventory, and restaurants are upgrading their outdoor seating in preparation for the summer,” Arora added. “Big banks make speedier decisions on non-SBA loans, which take a long time to process. That is a major reason for the jump in approval rates by big banks.”
Small business loan approval rates at small banks decreased to 51.1% in April 2014, down from 51.6% last month.
“Small banks are down because they are not processing SBA Express loans as quickly as they were last month,” said Arora, who oversaw the research. “I was a little surprised to see them stall a bit in April.”
Meanwhile, loan approvals by credit unions dropped to the lowest level ever in the three year history of the Biz2Credit Index. Small business loan approval rates at credit unions slightly decreased from 43.6% in March to 43.5% in April.
“Overall, credit unions keep slipping in the small business lending marketplace, and approval rate percentages have dropped to their lowest levels,” added Arora.
Alternative lenders decreased for the fourth consecutive month to 63.5% in April from 63.6% in March 2014. Alternative lenders are starting to feel the squeeze from banks and institutional lenders, which are attracting higher quality borrowers who are willing to shop around.
Institutional Lenders granted 58.3% of the funding requests they received in April, a moderate increase from 58.1% in March. These institutions include credit funds, insurance companies, family funds, and other yield-hungry, non-bank financial institutions. They typically offer more competitively priced loan options than alternative lenders in amounts up to $1 million.
“Institutional Investors are taking away market share from alternative lenders,” Arora said. “They are gathering momentum as a category of small business lender as company owners to borrow larger sums of money at cheaper interest rates.”
To view the historic chart of the Biz2Credit Small Business Lending Index, visit https://www.biz2credit.com/small-business-lending-index/april-2014.html
About the Biz2Credit Small Business Lending Index
Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. 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, which connects business borrowers and lenders.
Founded in 2007, Biz2Credit has arranged more than $1.2 billion in small business funding throughout the U.S. and is widely recognized as the #1 online credit resource for startup loans, lines of credit, equipment loans, working capital and other funding options. Using the latest technology, Biz2Credit matches borrowers to financial institutions based on each company’s unique profile — completed in less than four minutes — in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,300+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Visit www.biz2credit.com, follow on Twitter @Biz2Credit, and Facebook at www.facebook.com/biz2credit.