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Small Business Lending Index for July 2012 Reports Increases in Approvals by Big Banks and Alternative Lenders and a Drop in Credit Union Lending
NEW YORK, NY, August 9, 2012 – The Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2credit.com, revealed that approvals in July2012 by big banks ($10B+ in assets) improved for the second consecutive month to 11.3% from 11.1% in June 2012. This figure represents the highest approval rate by big banks since March 2012; a positive indication that small business lending is gaining momentum among large and mid-sized banks.
Conversely, small bank lending dropped slightly to 47.4% in July 2012 from 47.5% in June 2012. This figure however is still up two and a half percentage points from 44.9% last July.
“We are continuing to see more mid-sized banks, such as Sovereign, reemerge in the market,” explained Rohit Arora, CEO of Biz2Credit, who oversaw the research. “Big banks, which have been under pressure to increase small business lending, are continuing to close more deals.”
The July 2012 loan approval rate of credit unions dipped to 54.6%, down from 55.8% in June. The figure represents the lowest approval rate for credit unions since August 2011, when the figure stood at 54.2%. Some credit unions have reported that they had reached their lending limit, which currently is 12.25% of total assets.
The slowdown is due, in part, because some credit unions reportedly ‘capped out’, while others are being more cautious in their lending because of greater scrutiny by the SBA. The Credit Union Small Business Jobs Bill proposed by Senator Mark Udall (D-CO) seeks to raise the credit union business lending cap to 27.5% of total assets from the current figure of 12.25%.
Although credit union lending dropped, alternative lenders — accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others — are picking up the slack. In July, alternative lenders approved 64.1% of loan requests, up from 62.9% in June and nearly 12 percentage points higher than a year ago. The 64.1% approval rate was the highest figure since the Biz2Credit Small Business Lending Index began in 2011.
“While credit union approvals slowed, alternative lenders picked up the slack with their highest approval rating since we began measuring the category. Alternative lenders should continue to reap the benefits of capped out credit unions,” said Arora, one of the nation’s leading experts in small business lending.
|
Month |
Big Bank Approval % |
Small Bank Approval % |
Credit Union Approval % |
Alternative Lenders Approval % |
|
July 2011 |
9.8% |
44.9% |
53.4% |
52.2% |
|
August 2011 |
9.4% |
43.8% |
54.2% |
58.0% |
|
Sept. 2011 |
9.2% |
45.1% |
55.5% |
61.5% |
|
Oct. 2011 |
9.3% |
46.3% |
56.6% |
61.8% |
|
Nov. 2011 |
10.0% |
47.0% |
57.0% |
62.0% |
|
Dec. 2011 |
9.7% |
47.1% |
57.4% |
62.2% |
|
|
|
|
|
|
|
Jan. 2012 |
11.7% |
47.5% |
57.6% |
62.4% |
|
Feb. 2012 |
11.7% |
47.6% |
57.8% |
62.5% |
|
March 2012 |
10.9% |
47.6% |
57.9% |
63.0% |
|
April 2012 |
10.6% |
45.9% |
57.4% |
63.0% |
|
May 2012 |
10.2% |
45.5% |
57.6% |
63.2% |
|
June 2012 |
11.1% |
47.5% |
55.8% |
62.9% |
|
July 2012 |
11.3% |
47.4% |
54.6% |
64.1% |
* Banks with more than $10 billion in assets are classified as “big banks.”
* Banks with less than $10 billion in assets are classified as “small banks.”
* Credit Unions are considered a category unto themselves in the Biz2Credit Small Biz Lending Index.
* “Alternative lenders” include accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others.
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 online platform connects business borrowers with more than 1,100 lenders nationwide.
About Biz2Credit
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 nearly $700 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.
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Contact: John Mooney, Over The Moon PR, (908) 663-2121 office, (908) 720-6057 cell, john@overthemoonpr.com