Small Business Lending at Big Banks is On the Rebound, Says Biz2Credit

Biz2Credit Lending Index April 2017

Loan approval rates at big banks rebounded after a setback month, the latest Biz2Credit Small Business Lending Index has revealed.

Biz2Credit Lending Index April 2017

Big Banks, Small Banks and Institutional Lenders Give Businesses a Reason to Cheer

According to the newly published report, loan approval rates at big banks grew by two-tenths of a percent to a new all-time index high of 24.3 percent. This marked recovery from last month’s stagnant percentage, which ended a seven-month streak of increases.

Rohit Arora, Biz2Credit CEO said, “Recent interest rate hikes and the Fed’s announcement that it will start unwinding the $4.5 trillion in bonds on its balance sheets signals a strong economy. Since most small business loans are tied to U.S. prime interest rates, there will be more incentives for banks to approve loan requests as lending in this sector will be more profitable.”

Approval rates improved at small banks as well. In April, small banks saw approval rates increasing by one-tenth of a percent to 49 percent. According to Arora, “Small business owners are increasingly opting for SBA-backed loans, which any small banks offer. SBA loans come with reduced risks for borrowers and lenders.”

Meanwhile institutional lenders’ approval rates improved to 63.7 percent, reaching a new high on the index.

Approval Rates Decline at Alternative Lenders and Credit Unions

On the other hand, alternative lenders saw approval rates dropping by three-tenths of a percent. In April, they approved 57.9 percent of loans requested.

This is the tenth consecutive month of decreases in this category of lenders. Arora explained, “Alternative lending is losing its luster because competing lending institutions are improving their speed of processing loan requests and do so at lower interest rates.”

As for credit unions, approval rates declined one-tenth of a percent reaching 40.6 percent. This is the lowest lending rate to date in this category.

“Credit unions are dropping in small business finance,” Arora said. “Their competitors have a leg up on them as credit unions cannot compete in the dollar amount or speed of loan processing that borrowers are now demanding.”

Biz2Credit’s April 2017 edition of its report analyzes the results of more than 1,000 small business loan applications.


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Shubhomita Bose Shubhomita Bose is a Staff Writer for Small Business Trends. She covers key studies and surveys about the small business market, along with general small business news. She draws on 8 years of experience in copywriting, marketing and communications, having worked extensively on creating content for small and medium sized enterprises.

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