From June to July of 2021, small business loan approval at big banks increased from 13.6% to 13.8%.
The approval percentage rate at small business banks is up one-half of a percent from one year ago. And it is up from 18.9% in June to 19.1% in July for this year.
Small Business Trends
August 15, 2021
by Michael Guta
From June to July of 2021, small business loan approval at big banks increased from 13.6% to 13.8%. The data comes from the latest Biz2Credit Small Business Lending Index. The index also reports a jump in loan approvals at institutional and alternative lenders in July.
Biz2Credit Small Business Lending Index – August 2021
The increase in small business loan approvals comes as the segment added 91,000 new jobs in July. And as the economy starts to crawl out the pandemic, lenders are also looking to help small businesses in their recovery. But not everyone is eager to approve loans to small businesses.
According to Biz2Credit CEO Rohit Arora, “Big banks remain comparatively stingy in their small business loan-making. This is opening up opportunities for smaller banks and alternative lenders to gain market share,”
The approval percentage rate at small business banks is up one-half of a percent from one year ago. And it is up from 18.9% in June to 19.1% in July for this year. The higher approval rates are also shared with non-bank lenders.
Higher Approval Rates at Non-Bank Lenders
Non-bank lenders provide funding for women-owned and minority-owned businesses as they don’t solely focus on FICO scores. This according to Arora who also said these lenders focus, “…more on the financial health of the borrowers who are applying for funding.”
When it comes to these lenders, institutional lender approval was 23.9% in July. This is up two full percentage points from one year ago and one-tenth of a percent from 23.8% in June. Similarly, the rate for alternative lenders rose 0.2% from 24.5% in June to 24.7% of funding applications in July 2021. Same time last year, the approval for alternative lenders was 23.1%.
Credit unions, which specialize in addressing the need of small businesses, approved 20.5% of funding requests in July. This is the same rate as in June while being down almost a percentage point from last year’s 21.2%.