Big Bank Loan Approvals for Small Businesses Up 70%
Small business loan approvals at big banks rose to a new high of 17.3%, according to the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com.
Further, loan approvals at big banks experienced increases in five of the last six months. More importantly, in a year-to-year comparison, the index finds small business lending approvals at big banks are up 70% over the figure from May 2012.
“The jump in approvals at big banks is a product of their heavy investments in technology to improve the method of processing loan applications. A number of big banks have been putting a lot of money into upgrading their small business loan process with the technological innovations that increase the speed and service of approvals,” said Biz2Credit CEO Rohit Arora, who oversaw the research.
Loan approvals at small banks dropped for the first time in six months. Small business loan approvals in April 2013 were previously at an all-time index high of 50.9% before dipping to 49.5% in May 2013. However, a year-to-year comparison indicates approvals are still up about ten percent from last year’s figures.
“Although small banks continue to be aggressive players in small business lending, they are beginning to feel heat from the competition of big banks. Small banks must continue to invest in technology to stay ahead of the game. Otherwise big banks will take over,” suggested Arora. “Big banks often offer better rates than small banks and pricing is one of the many deciding-variables, so it is essential that small banks remain diligent in keeping up with technological advances and process loans quicker.”
Small business loan approvals by alternative lenders – accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), microlenders, and others – decreased slightly to 63.3% from the 63.4% rate in April 2013.
To view the Biz2Credit Small Business Lending Index, click here.