Small Business Approval Rates Improve Past 12 Months
The Biz2Credit Small Business Lending Index, an analysis of 1,000 loan applications on Biz2credit.com, found that approval rates of small business financing requests in January by small banks and non-bank lenders increased to their highest levels in the past 12 months. The big trend in small business lending continues to be the rise of alternative lenders: Community Development Financial Institutions (CDFI), accounts receivable financers, merchant cash advance, micro lenders, and others. In January, these institutions approved 62.4% of the funding requests, up from 62.2% of funding requests in December.
As a category by themselves, credit unions, which have become increasingly active in small business lending, granted 57.6% of small business funding requests, a rise from the 57.4% approval rate in December 2011.
Loan approvals by small banks increased to 47.5% in January 2012, up from 47.1% in December, to reach their highest rate in the past year. Meanwhile, lending at big banks jumped two percentage points over December’s rate to 11.7%, the highest rate since February 2011.
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 analysis found that loan request amounts ranged from $25,000 to $3 million; that the average credit score was above 680, and that average-time-in-business was slightly more than two years.