Institutional lenders reached an all-time high in the number of small business loans they approved, as did big banks, the latest Biz2Credt Small Business Lending Index reveals.
Small banks, however, reached an all-time low in total number of approved small business loans.
Specifically, institutional lenders (including credit funds, family offices and hedge funds) continued to show month-over-month growth in small business loan approvals, reaching 62 percent up from August’s 61.8 percent. September, in fact, marked the twelfth consecutive month of loan approval growth for this category of lender.
Big banks (banks with $10 billion or more in assets) showed a September increase to 22.5 percent of small business loans approved up from July’s 22.3 percent approved.
“The institutional lenders and big banks have hit their highest approval rates since the Small Business Lending Index launched in January 2014,” Rohit Arora, CEO of Biz2Credit, said in a statement. “Big banks are starting to get more aggressive in the marketplace while the flavor of the month is more capital coming from institutional lenders.”
Big banks have indeed shown that they are making an effort to approve more small business loans since the recession’s dark depths. Still, small business loan approvals have fluctuated within this lending channel over the past six months.
The vacillation has ranged by only a few tenths of percentage points, but is nevertheless revealing, Biz2Credit noted. Overall, big banks have implemented digital strategies that have failed on two key fronts. These lenders still need to find ways to improve the customer experience for small businesses, as well as speed up the approval process.
Biz2Credit is an online marketplace for small business funding. Its proprietary platform, which matches borrowers with capital sources, has arranged for more than $1.2 billion in small business funding for thousands of U.S. businesses, the company says.
In fact, the September report showed how the growth trend for online lenders has crystallized.
“Biz2Credit reported that the average working capital funded on its platform has increased by 20 percent over the last six months, an indication that larger small businesses are starting to borrow via online lenders” Arora said.
Biz2Credit’s monthly analysis of small business lending is based on a survey of 1,000 loan applications received by its platform each month.
Image: Biz2Credit/Small Business Trends
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Interesting article. Here in Australia, the cuts to the cash rate by the reserve bank seem to be stimulating the property market rather than lending to Small and medium sized business.
I guess big banks are just about the same as institutional lenders. When they are soaring, expect the same to happen to big banks as well.