Loan approval rates continue to slowly rise, with Small Banks and Alternative Lenders seeing the strongest growth during June. Of all lenders, loan rates only decreased with Credit Unions, and that was just a 1% decrease.
“We are nowhere near pre-pandemic approval percentages, however,” said Biz2Credit CEO Rohit Arora. “Still, these are positive signs.”
“Rising labor costs, combined with 8.6% inflation in May, continue to put a financial crunch on small companies,” he added.
Biz2Credit is an online lending platform and reports monthly on loan approval rates. The report is based on loan applications from 1,000 small business owners. The report includes loan approval rates through June 2022.
Small Business Loan Approvals Up Slightly
Here’s a look at some key data from the June 2022 Biz2Credit Small Business Lending Index:
Big Banks (those with more than $10 billion in assets) reached a 15.4% approval rating, an increase from 15.3% in May. That follows a steady increase: 15.1% during April, 14.9% approval rating during March, up from 14.7 in February and 14.5% in January.
Two years ago, the loan approval rates for Big Banks were 28.3%.
The approval rating for Small Banks grew to 21.1% in June, up from. 20.9% in May. Two years ago, the loan approval rate from Small Banks was 50%.
Institutional Lenders saw an approval rate rise a tenth of a point, to 25.6% in June. Past rates were 25.1% in January, 25.2% in February, 25.3% in March, 25.4% in April and 25.5% in May. Two years ago, the loan rate for Institutional Lenders was 66.5%.
Alternative Lenders approval rates rose from 26.9% in May to 27.1% in June. Two years ago, the loan approval rate for Alternative Lenders was 55.9%.
Credit Union rates had remained steady at 20.6% for several months, but dropped to 20.5% in June. Two years ago, the loan approval rate from Credit Unions was 39.6%.
How Biz2Credit Compiles the Report
Biz2Credit analyzes loan requests from businesses which have been in business for more than 2 years, which also have a 680 points or higher credit rating. Biz2Credit compiles data from more than 1,000 businesses to prepare the report.