Small business loan approval rates at big banks (
“Increasingly, creditworthy borrowers are applying for small business loans at big banks and having them approved,” explained Arora, one of the nation's leading experts in small business lending. “Big banks, which request proof of three years of profitability, are now receiving applications from companies whose fortunes increased from 2011-2013."
Small business loan approvals at small banks reached a new benchmark of 50.9% in
“SBA lending has picked up considerably over the last month,” said Biz2Credit CEO
Meanwhile, credit unions experienced a drop in small business approval rates in January, thereby continuing their slide. Approval rates at credit unions dipped to an all-time low of 43.4% in January from 43.9% in November. Further, lending approval rates by credit unions has declined in 16 of the last 20 months and is down nearly 25 percent in that 20-month period.
Alternative lenders, which emerged as important players in small business lending in 2013, experienced a drop-off in approval rates from 67.3% in December to 64.1% in
"What we may be seeing is a return to normalcy for alternative lenders. While they offer speed in their decision-making, alternative lenders charge higher rates than others," said Arora. "As banks have become more aggressive in small business lending, the higher quality borrowers seem to be going to them."
Institutional Lenders, a new category in the Biz2Credit Small Business Lending Index, approved 56.5% of the funding requests they received. This category of lenders includes credit funds, insurance companies, family funds, and other yield-hungry, non-bank financial institutions that typically offer more competitively priced loan options than alternative lenders in amounts up to
"Institutional investors have emerged in small business lending and offer interest rates that generally fall somewhere between the rates offered by banks (around 6%) and alternative lenders that charge up to 30-50%," Arora said. "As more institutional lenders come into the marketplace, it provides greater amounts of long-term, stable money to the marketplace. Borrowers can get better products at attractive interest rates and terms."
In the last 3-4 months, Biz2Credit has processed over
"The demand for short-term, high-interest financing will go down, and institutional lenders will fill that void,” added Arora, who expects this category to grow as the economic conditions continue to improve.
To view the historic chart of the Biz2Credit Small Business Lending Index, visit https://www.biz2credit.com/small-business-lending-index/january-2014.html.
About the Biz2Credit Small Business Lending Index
Biz2Credit analyzed loan requests ranging from
Founded in 2007, Biz2Credit has arranged more than
Read the full story at http://www.prweb.com/releases/smallbusiness/lending/prweb11571993.htm
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