Loan approval rates from smaller banks and alternative lenders rise 0.2% in July, says Biz2Credit report

Loan approval rates continue to slowly increase, according to the July Biz2Credit Loan Report. As they did in June, smaller banks and alternative lenders saw the strongest growth, each posting a 0.2% increase.

Institutional lenders and large banks each saw a 0.1% increase in loan approval rates. Of all the lenders, loan rates only went down with credit unions, and that was only a 1% drop.

Biz2Credit Small Business Loan Index August 2022

Biz2Credit CEO Rohit Arora said the increases were “positive signs” but pointed out that for smaller businesses, financing is often variable rate. Floating rates mean that the cost of capital for small businesses increases as they continue to struggle to find workers.

“Rising labor costs, combined with inflation of 8.6% in May, continue to weigh on small businesses,” Arora said.

Biz2Credit is an online lending platform and publishes monthly loan approval rate reports. The report is based on loan applications from 1,000 small business owners.

The report includes loan approval rates through July 2022.

June Biz2Credit Small Business Lending Index Key Data

Big banks

Big banks (those with more than $10 billion in assets) achieved an approval rating of 15.5%, up from 15.4% in June. The big banks have seen a steady 0.1% increase in their approval rating since March.

Two years ago, loan approval rates for major banks were 28.3%.

Small banks

The approval rating for small banks rose to 21.1% in July from 20.0 in June.

Two years ago, the loan approval rate for small banks was 50%.

Institutional lenders

Institutional lenders saw their approval ratings rise by a tenth of a point to 25.6% in July. Institutional lenders have seen a stable approval rate of 0.1% since January.

Two years ago, the lending rate for institutional lenders was 66.5%.

Alternative lenders

Approval rates for alternative lenders rose to 27.1% in July from 26.9% in June.

Two years ago, the loan approval rate for alternative lenders was 55.9%.

credit unions

Credit union rates had been steady at 20.6% for several months and fell to 20.5% in July.

Two years ago, the credit union loan approval rate was 39.6%.

How Biz2Credit compiles the report

Biz2Credit analyzes loan applications from companies that have been in business for more than 2 years, which also have a credit score of 680 points or higher. Biz2Credit compiles data from over 1,000 companies to prepare the report.

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