According to the Biz2Credit Small Business Lending Index, the loan approval percentage across all categories of lenders is rising. For banks and institutional lenders, the month of June has delivered new highs.
This is great news for small businesses who are looking for capital to expand their operations. However, the robust economy has resulted in the Fed increasing interest rates, with the latest one coming on June 13, making it the second hike for the year.
For small businesses looking for loans, now is a good time. Because the cost of borrowing money will get more expensive. The Fed is slated to raise the interest rates again, perhaps going as high as 2.4% by the end of 2018. And according to a report posted at Forbes by Biz2Credit CEO Rohit Arora, the rate could be 3.4% by the end of 2020.
As Arora explains, “Time is money when it comes to securing capital for your small business. The longer you wait, the more costly loans will become. Business owners who have dared well during the past two years and who are optimistic about their near-term success will want to apply now if they plan to secure financing for growth during 2018.”
Biz2Credit Lending Index June 2018
When it comes to the numbers, big banks again led the way in June with a two-tenths of a percent increase in loan approvals over last month. In May big banks had an approval rate of 25.9%, and June delivered 26.1%. This segment has been steadily rising for more than a year.
Small banks also rose the same two-tenths of a percent to 49.6%, the highest rate since April 2015.
For institutional lenders, the jump was only one-tenth of a percent to 64.8%, with alternative lenders seeing the same increase going up to 56.5% in June.
Credit unions, on the other hand, did just as well as small and big banks increasing two-tenths of a percent to 40.3% for the month.
Arora said, “Even credit union lending to small business picked up in June. Credit union approvals had been steadily declining this year. June’s figure was the highest since January 2018.”
Here is the infographic for the June 2018 Biz2Credit Small Business Lending Index.