In 2011, small business lending was at an all time low, with banks approving less than nine percent of loans for small businesses.
What a difference four years makes.
Lending from large banks to small businesses more than doubled between June 2011 and June 2015 to reach an all-time high, according to the latest figures from the Biz2Credit Lending Index June 2015.
In June 2011, 8.9 percent of small business owners saw their loans approved. Compare that to last month, in which banks approved 22.1 percent of loans requested by small businesses. It marked the eighth straight month that approvals by large banks have increased.
In the release announcing the milestone, Biz2Credit CEO Rohit Arora, who oversees the research explains:
“Big banks are increasingly adopting digitization. This makes them more efficient and is of benefit to borrowers, as well. These are the best numbers for big bank lending since the recession. Small business lending is profitable; that’s why we see institutional lenders getting into marketplace lending. It is a good time for entrepreneurs in search of capital.”
By contrast, approval rates from small banks continued to struggle, dropping to 49.3 percent, their lowest rate in the past year.
In the release, Arora adds:
“Small banks need to start adapting to technology quickly. Otherwise they will continue losing market share to big banks and institutional lenders. Their competitors make quicker decisions and get deals done. Meanwhile, they are not keeping pace. We have seen small banks falling behind in both the personal loans space and small business lending space during the past two and half years.”
Approval rates from credit unions and alternative lenders, meanwhile, saw little change between May and June.
Alternative lender rates hovered at 61 percent for both months, while credit union approvals dipped from 43.1 percent to 43 percent during the same period.
To get its figures, Biz2Credit analyzed loan requests from $25,000 to $3 million submitted by businesses that had been operating two years or more, with years with an average credit score of 680 or higher. Results come from primary data submitted by more than 1,000 business owners who applied for funding using Biz2Credit’s online lending platform, which connects business borrowers and lenders.
More in: Biz2Credit