NEW YORK, March 17, 2020 (GLOBE NEWSWIRE) -- The approval percentage for small business loan applications at big banks ($10 billion+ in assets) stayed flat at 28.3% in February 2020, which remains post-recession record high, according to the Biz2Credit Small Business Lending Index™ released today.
“Despite the Coronavirus scare during the month of February, small business lending was solid during the month,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “We are likely to see the fallout from the spread of the virus in next month’s figures. Until very recently, the economy was chugging right along. The March figures will look different.”
The approval rate at small banks dipped one-tenth of a percent, falling from 50.4% in January to 50.3% in February.
“As was the case in January, smaller banks are down slightly because they process more SBA loans, and the banks that make them want to see 2019 tax returns before making lending decisions,” Arora said.
According to the Bureau of Labor Statistics’ Jobs Report, nonfarm employment rose by 273,000 in February, while the unemployment rate was little changed at 3.5% last month. Notable job gains occurred in health care and social assistance, food services and drinking places, government, construction, professional and technical services, and financial activities.
“February’s employment figures were better than expected. However, with the havoc caused by the coronavirus, the March figures will not be as rosy,” said Arora, one of the country’s leading experts in small business finance.
Institutional lenders’ approval rates rose one-tenth of a percent from January’s figure of 66.4% to 66.5% in February 2020.
“Institutional lenders continue to gain strength in small business lending. With attractive interest rates and longer terms than most other non-bank lenders, they are a fine source of capital for small businesses,” Arora said.
Small business loan approval rates among alternative lenders dipped from 56.1% in January to 55.9% in February 2020.
“Alternative lenders offer financing to businesses that banks often turn away,” Arora said. “For companies with mediocre or poor credit histories, they are a willing lender, which can be hard to find since such a high emphasis is placed on credit scores by traditional bank lenders.”
The approval percentage rate for credit unions remained at a record low of 39.6% in February.
“I don’t see much movement from credit unions, which continue to struggle in the business credit marketplace. Those that do not upgrade their digital capabilities or partner with FinTech firms cannot expect to see their fortunes improve in today’s lending marketplace,” Arora said.
Biz2Credit analyzed loan requests from companies in business more than two years with credit scores above 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's platform.
Founded in 2007, Biz2Credit has arranged more than $3 billion in small business financing. The company is expanding its industry-leading technology in custom digital platform solutions for banks and other financial institutions, investors and service providers. Visit www.biz2credit.com or Twitter @Biz2Credit, Facebook, and LinkedIn.
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