Big Bank Lending to Small Businesses Jumped 30% in September
Biz2Credit Small Business Lending Index for September 2012 Reports Increases in Approvals by Big Banks and Alternative Lenders; Approval Rates of Small Banks and Credit Unions Drop
NEW YORK, NY, October 9, 2012 – Big banks are back. During a month in which the overall volume of loan applications increased by 5.6%, the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2credit.com, revealed that approval rates jumped 30% at big banks during in September 2012.
The Index found that 14.2%.of funding requests were approved by big banks ($10B+ in assets) in September — a 30% jump from 10.9% in August 2012. The figure represents the highest approval rating percentage for big banks since Biz2Credit began the Index in 2011.
“Lenders including Citibank, Sovereign and Citizens Bank are jumping head-first back into small business lending. The economy seems to be improving slowly, and the improvement has been a factor in their willingness to lend to small businesses,” said Rohit Arora, Biz2Credit co-founder and CEO, who oversaw the research. “This is a good sign for the economy. Combined with surprisingly good September jobs report, the positive economic news comes just as President Obama tries to recover from his poor debate performance against Mitt Romney.”
Meanwhile, small bank lending approvals dipped slightly from 47.8% in August to 47.6% in September. The loan approval rate of credit unions dropped for a fourth consecutive month in September down to 52.4% from 52.9% in August. The September figure represented the lowest credit union approval rate since June 2011.
Alternative lenders – accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others – continue to make an impact on small business lending. In September, alternative lenders approval rates rose slightly to 64.6%, up from 64.5% in August. The 64.6% approval rate was the highest recorded since the Biz2Credit Small Business Lending Index began.
“Alternative lenders offer greater flexibility, quicker approvals, and competitive lending rates than they ever have before. This type of financing is very helpful for small and mid-size businesses that encounter short-term cash flow issues,” added Arora, one of the nation’s leading experts in small business finance. “Restaurants and retailers, in particular, find this type of financing attractive as they look to the fourth quarter to be profitable than other parts of the year. Many businesses are seeking short-term working capital to prepare for the upcoming holiday season.”
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. Biz2Credit’s connects business borrowers with more than 1,100 lenders nationwide.
Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers, and complementary business tools. The company matches borrowers to financial institutions based on business’ unique profile — completed in less than four minutes — in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Having arranged $700 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.