NEW YORK, Feb. 08, 2022 (GLOBE NEWSWIRE) -- Small business loan approval percentages at big banks ($10+ in assets) increased from 14.3% in December to 14.5% in January, and small banks’ approvals also rose from 20.1% in December to 20.3% in January, according to the latest Biz2Credit Small Business Lending Index™ released today.
Among several categories of non-bank lenders, approval percentages also climbed. Institutional lenders approved 25.1% of funding requests in January, up two-tenths of a percent from 24.9% in December. Alternative lenders’ approval rates rose from 26.1% in December to 26.3% in January. Credit unions approved 20.7% in January, up one-tenth of a percentage after stalling the prior two months.
Two years ago, bank approval percentages were almost double what they are today. In January 2020, big banks approved 28.3% of loan requests, while small banks approved 50.4% of loan applications. Non-bank lender percentages in 2020 were even higher: institutional lenders approved nearly two-thirds (66.4%) of requests, alternative lenders granted 56.1%, and credit unions approved 39.6%.
“Banks and most non-bank lenders are showing slow but steady increases in their loan approval percentages, as business owners look to reinvest in their businesses,” said Rohit Arora, CEO of Biz2Credit, one of the nation’s leading experts in FinTech and small business lending. “Still, approval percentages are rising slower than anyone had hoped. An expected increase in interest rates from the Federal Reserve may entice them to open the purse strings a little bit more. Loan approval rates are still far below pre-COVID approval levels of January 2020.”
Total nonfarm payroll employment rose by 467,000 in January, and the unemployment rate was little changed at 4.0%, according to the Jobs Report released by the U.S. Bureau of Labor Statistics on Friday, Feb. 4. Employment growth continued in leisure and hospitality, in professional and business services, in retail trade, and in transportation and warehousing. Many of these jobs are created by small businesses.
“The COVID crisis accelerated the shift towards digital lending to small businesses. More and more small business owners are now more comfortable in borrowing or applying for credit online, which wasn't the case prior to the pandemic,” Arora said. “Banks and non-bank lenders are looking to digitize their small business loan application process. Digital learning and AI have helped reduce lending risk, while digitizing has streamlined the process and reduced the time it takes to make a decision.”
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. To view the report for January 2022, click here.
About Biz2Credit
Founded in 2007, Biz2Credit has arranged more than $7 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.
Media Contact: John Mooney, 908-720-6057, john@overthemoonpr.com
