Small increase noted in small business approval rates

Loan approval rates continue to climb slowly, but are “far from pre-pandemic highs,” said Rohit Arora, CEO of Biz2Credit.

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 April 2022.

Small Business Approval Rates Up Slightly

The Federal Reserve continues to raise interest rates, and floating interest rates, and is likely to rise, Arora said. And that has direct implications for small businesses and their customers.

“The cost of capital for small business borrowers will rise,” Arora said. “This will have an impact on future loan decisions.”

big banks

Major banks (those with over $10 billion in assets) achieved an approval rating of 15.1%. That follows a steady increase: 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%.

small banks

The approval rating for small banks grew to 20.8% in April, from 20.6% in February. Two years ago, the loan approval rate from Small Banks was 50%.

Institutional Lenders

Institutional lenders saw the approval rate increase by a tenth of a point to 25.4% in April. Past rates were 25.1% in January, 25.2% in February and 25.3% in March. Two years ago, the borrowing rate for Institutional Lenders was 66.5%.

Alternative Lenders

The approval rates of alternative lenders rose from 26.8% to 26.6% in March. Two years ago, the approval rate for alternative lenders was 55.9%.

credit unions

Credit Union rates remained stable at 20.6%. Credit union loan approval rates have been at the same level for several months, within a tenth of a point. Two years ago, the credit union loan approval rate was 39.6%.

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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Image: Biz2Credit


This post Small increase noted in small business approval rates was original published at “https://smallbiztrends.com/2022/05/biz2credit-small-business-lending-index-may-2022.html”

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