Loan approval rates continue to rise slowly, with small banks and alternative lenders showing the strongest growth in June. Of all lenders, loan rates fell only at credit unions, and that was only a 1% drop.
“However, we are nowhere near pre-pandemic approval rates,” said Rohit Arora, CEO of Biz2Credit. “Still, these are positive signs.”
Rising labor costs, combined with inflation of 8.6% in May, continue to put financial pressure on small businesses, he added.
Biz2Credit is an online lending platform and reports monthly on loan approval rates. The report is based on loan applications from 1,000 small business owners. The report includes loan approval rates through June 2022.
Small business approvals have increased slightly
Here are some key data from the June 2022 Biz2Credit Small Business Lending Index:
Major banks (those with more than $10 billion in assets) achieved an approval rating of 15.4%, up from 15.3% in May. That follows a steady increase: 15.1% in April, 14.9% approval score in March, up from 14.7 in February and 14.5% in January.
Two years ago, loan approval rates for major banks were 28.3%.
The approval rating for small banks rose to 21.1% in June, up from . 20.9% in May. Two years ago, the Small Banks loan approval rate was 50%.
Institutional lenders saw the approval rate increase by a tenth of a point to 25.6% in June. Past rates were 25.1% in January, 25.2% in February, 25.3% in March, 25.4% in April and 25.5% in May. Two years ago, the borrowing rate for Institutional Lenders was 66.5%.
The approval rates of alternative lenders rose from 26.9% in May to 27.1% in June. Two years ago, the approval rate for alternative lenders was 55.9%.
Credit Union rates had been stable at 20.6% for several months, but fell to 20.5% in June. Two years ago, the credit union loan approval rate was 39.6%.
How Biz2Credit compiles the report
Biz2Credit analyzes credit applications from companies that have been in business for more than 2 years and also have a credit rating of 680 points or higher. Biz2Credit collects data from more than 1,000 companies to prepare the report.
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This post Small business approvals from some lenders rose slightly in June was original published at “https://smallbiztrends.com/2022/07/biz2credit-small-business-lending-index-june-2022.html”