Slight declines in approval percentages at alternative lenders and credit unions
NEW YORK, Sept. 08, 2020 (GLOBE NEWSWIRE) — Small business loan approval percentages at large banks (over $10 billion in assets) and small banks fell slightly in August 2020, this which indicates that the upward trend that began in May has stabilized, according to the Biz2Credit™ Small Business Loan Index published today.
“PPP lending stopped on August 8, and it’s been difficult to get traditional financing for small businesses in the coronavirus era,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “Big banks hit a record approval rating of 8.9% in April and slowly rebounded, but the curve flattened last month.”
In August, big banks granted only 13.6% loan applications received, compared to 13.8% in July. In the same way, small banks approved 18.5% funding requests, down slightly from 18.6% the previous month.
“What is disheartening is that the trend over the past few months has been positive. Now it seems to have leveled off,” added Arora, one of the country’s leading small business lending experts. “It’s a wait-and-see attitude, especially when some businesses aren’t operating at full capacity yet.”
the Biz2Credit Small Business Loan Index the figures do not reflect the approval of Paycheck Protection Program (PPP) loans which are made by the government, rather than the banks themselves. PPP loans ended on August 8 after providing nearly 5 million small businesses with a much-needed injection of cash, which will likely be “forgivable loans” in most cases. Now that the program is over, many small business owners are hoping Congress will pass PPP2 legislation to help continue the flow of capital to America’s small businesses.
The US Bureau of Labor Statistics’ September 4 jobs report found nonfarm payroll employment rose 1.4 million in August, while the unemployment rate fell to 8.4%. These improvements in the labor market reflect the continued recovery in economic activity that had been reduced due to the coronavirus pandemic and the efforts to contain it. Notable private sector job gains occurred in retail trade, professional and business services, recreation and hospitality, and education and health services. Many of these jobs are created by small businesses.
Loan approval rate among alternative lenders dropped a notch, from 23.1% last month to 23.0% in August. Also, credit unions also slipped a tenth of a percent, from 21.2% in July to 21.1% this month.
Institutional lenders were the only category of lenders to see a slight increase in approval percentages in August, with approvals rising to 21.9% in July, compared to 22.0% in August.
“Institutional lenders only saw a slight gain,” Arora said. “Overall, it’s been a tough month for small business borrowers weighing their next move as they try to navigate their way.”
About Biz2Credit Small Business Lending Index
Biz2Credit analyzed loan applications from businesses that had been in business for 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 financing on the Biz2Credit platform.
About Biz2Credit
Founded in 2007, Biz2Credit has arranged over $3 billion in small business financing. The company extends its cutting-edge technology into customized 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, [email protected]
