NEW YORK, Sept. 10, 2019 (GLOBE NEWSWIRE) -- Approval rates for small business loan applications rose to another post-recession record (27.8%) at big banks ($10 billion+ in assets), while approval percentages also stayed above 50% at small banks in August, according to the Biz2Credit Small Business Lending Index™ released today.
“Small business lending is as strong as ever at big banks and at regional and community banks. It appears that 2019 will likely be the best year in history for entrepreneurs in need of financing, so long as they have a solid credit history when they apply,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research derived from more than 1,000 small business credit applications on his company’s online lending platform.
Small bank approvals of small business loan applications inched up two-tenths of a percent to 50.3% in August from 50.1% in July.
“SBA Loans spur small business lending. The government guarantee on the loans make them very attractive for regional and community banks,” Arora explained. “It’s a very positive sign that approval rates continue to climb above the 50% benchmark.”
“The SBA loan guarantee encourages lenders to say ‘yes’ to small business owners who might otherwise be turned down under the banks’ own underwriting criteria,” said SBA New York District Director, Beth Goldberg. “Thousands of jobs and hundreds of millions of dollars enter the New York economy with the help of SBA’s loan guarantee.”
Goldberg added that through August of FY2019, 32 lenders have made SBA guaranteed loans in the New York District that did not participate in the program last year.
Meanwhile, the Labor Department’s Jobs Report released on September 6, reported that nonfarm payroll employment rose by 130,000 in August, and the unemployment rate was unchanged at 3.7 percent. The U.S. Bureau of Labor Statistics noted that significant job gains occurred in health care and finance.
Additionally, the Federal Reserve is said to be discussing another interest rate cut that could result in another one-quarter point drop in the cost of capital. The Fed’s next policy meeting is scheduled for September 17-18.
“Interest rates are attractive as it is now. If someone has been sitting on the fence waiting for a more attractive rate, this could be it, but we won’t know until after the Fed meets. It’s not an absolute certainty that they will approve the cut,” Arora said.
Institutional lenders’ approval rates rose one-tenth of a percent to 65.8% from July’s figure of 65.7%.
“Institutional lenders are playing an increasingly important role in small business financing,” Arora said.
Small business loan approval rates among alternative lenders dropped two-tenths of a percent to 56.6% from 56.8% in July.
“Bank lending to small businesses has steadily grown, and this impacts alternative lenders, who typically strike deals with companies that banks have rejected,” Arora said.
A recent Biz2Credity study of small business categorized by industry found that restaurants and retail ventures, generally considered as riskier propositions, are finding success through non-bank lenders.
Credit unions climbed back up to the 40% mark in August, after slipping to 39.8%, which was a record low for since Biz2Credit began analyzing small business loan approval percentages in 2011.
“The Member Business Lending cap (12.25% of their assets), the aggressiveness of banks and alternative lenders, and the inability of many credit unions to process online loan applications has significantly hindered credit union lending to small businesses,” said Arora, who oversees the Biz2Credit research.
About the Biz2Credit Small Business Lending Index
Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's online lending platform, which connects business borrowers and lenders.
About Biz2Credit
Founded in 2007, Biz2Credit has arranged more than $2 billion in small business financing and has several times been named to Crain’s New York’s Fast 50 and was recently ranked among the top 200 fast-growing companies on Deloitte's 2018 Technology Fast 500. Biz2Credit is expanding its industry-leading technology in custom digital platform solutions for leading banks and other financial institutions, investors and service providers in the U.S. Visit www.biz2credit.com or follow Biz2Credit on Twitter: @Biz2Credit, Facebook, and LinkedIn.
Media Contact: John Mooney, (908) 720-6057, john@overthemoonpr.com