According to the latest Biz2Credit Small Business Loan Index, Small business loan approval percentages at major banks fell from 14.9% in September to 14.7% in October, marking the lowest total since February.
Approval percentages for business loan applications with smaller banks fell by three tenths of a percent, from 21.5% in September to 21.2% in October. Similarly, institutional lenders granted 25.7% of loan applications in October, down three tenths of a percent from September’s figure of 26%. Alternative lender approval percentages rose from 27.5% in September to 27.3% in October. Loans to credit unions remained flat at 20.4%.
“Continued inflation and uncertainty about where the Federal Reserve would set interest rates cast a shadow over lending to small businesses in October,” said Rohit Arora, CEO of Biz2Credit. “Approval percentages at large banks fell for the fourth straight month in October. Similarly, approvals at smaller banks, which had been rising steadily since April 2021, fell for the first time in more than a year. “While monetary policy aims to rein in inflation, it has yet to show clear signs of working,” Arora said. . “This is bad news for small businesses looking for capital. Loans are more difficult to obtain and the cost of capital has increased. It’s a double whammy for business owners. “Inflation is a big concern for small business owners, whose costs continue to rise and undermine profitability. However, the opposite of inflation is a recession, which is also problematic for small businesses,” Arora said. “It’s a tough time for small business owners right now.”Biz2Credit analyzed loan applications from businesses that had been in business for over two years with credit scores above 680. The results are based on primary data submitted by over 1,000 small business owners who applied for funding. on the Biz2Credit platform.