NEW YORK, NY (March 8, 2016) — Loan approval rates at both big banks and institutional lenders improved slightly in February 2016, according to the Biz2Credit Small Business Lending Index™, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Approval percentages dipped slightly at small banks, as well as credit unions.
Big banks ($10 billion+ in assets) approved 22.8% of funding requests in February, up one tenth of a percent from January 2016. At the same time, small banks granted 48.9% of funding requests in February, down slightly from 49% the previous month.
“The stock market is still relatively volatile, and there is uncertainty in the marketplace for lenders,” said Biz2Credit CEO Rohit Arora, who oversaw the research. “Overall, it is still a good time for businesses to borrow money.”
Credit unions approved 42.1% of loan applications in February, down slightly from 42.2% in January. February’s figure ties the category’s previous Index low for credit union approval percentage.
“Credit unions are not doing much to improve their small business lending, namely they are now investing in technology,” said Arora. “Thus, credit unions face challenges in competing for credit-worthy borrowers.”
Institutional lenders saw a slight uptick in February, improving to 62.7% from 62.6% in January. This category of lender has yet to experience a setback month since Biz2Credit started following it in 2014.
“Institutional lenders continue to make an impact in small business lending,” said Arora. “We expect to see more international funds enter the marketplace in search of higher yields — especially with growing uncertainty in global emerging markets.”
Loan approval rates at alternative lenders in February remained the same as in January at 60.8%. This trend coincides with the emergence of institutional lenders in the small business lending marketplace. Alternative lenders have been on a downward trend since 2014.
“Alternative lenders typically offer loan products at high interest rates. The businesses that resort to borrowing money from them when they have low credit scores and fewer options,” Arora suggested.
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, which connects business borrowers and lenders.
Founded in 2007, Biz2Credit has arranged more than $7 billion in small business financing. The company is expanding its industry-leading Biz2X technology in custom digital platform solutions for banks and other financial institutions, investors, and service providers. Visit www.biz2credit.com or Twitter @Biz2Credit, Facebook, and LinkedIn.
John Mooney
(908) 720-6057
john@overthemoonpr.
