Small business loan approval rates at big banks increased from 13.9% in August 2021 to 14% in September. Approvals from small banks also rose from 19.3% in August to 19.5% in September. The data comes from the latest Biz2Credit Small Business Lending Index.
Biz2Credit Small Business Lending Index – September 2021
The increase in loan approval rates for small businesses comes as unemployment continues to decline.
In September 2021, total nonfarm payroll employment increased by 194,000. In the same month, the unemployment rate dropped by 0.4% to 4.8%, according to the latest statistics from the Bureau of Labor.
The data also shows there have been notable employment gains in leisure and hospitality, retail, professional and business services, and in transportation and housing.
Rohit Arora, CEO of Biz2Credit, commented on the positive small business and employment outlook: “Business owners are investing in their companies, and banks are increasingly willing to lend. These are good signs for the small business economy.
“Every category of lender, including bank and non-bank lenders, have seen their loan approval percentages rise every month during the past five months,” Arora continued.
Higher Approval Rates at Non-Bank Lenders
Small business approval rates from non-bank lenders also grow in the same period. Non-bank lenders act as an important source of funding for businesses that need to secure funds quickly.
Approvals from institutional lenders increased to 24.5% in September, up from 24.3% in August. This type of lending is up 2.3% from the same period a year ago.
Alternative lenders’ approval rates were also up, jumping from 25.2% in August to 25.4% in September 2021. This is significantly higher than in September 2020, when funding applications to alternative lenders was 23.1%.
Credit unions, which specialize in addressing the requirements of small businesses, witnessed a similar increase, up one tenth of a percent in September 2021 from August. They were however down from 21% in September 2020.
The Small Biz Lending Index
The Small Biz Lending Index analyses the data of more than 1,000 small business owners who apply for funding on the Biz2Credit’s platform.
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Good to hear. SMBs need financing and it would be great if the big banks could take a bigger role.
That is really good news for small firms. Happy to read that.
Thanks for sharing this info.