Small business loan approval percentages at big banks (or those with more than $10 billion in assets) dipped slightly to 13.4% in April from 13.5% in March 2021, according to the latest Biz2Credit Small Business Lending Index. Similarly, approvals at small banks dropped to 18.2% in April, which was down from 18.3% in March.
“Traditional small business loans are hard to obtain at the moment, much more so than they were before the pandemic,” Rohit Arora, CEO of Biz2Credit, said. “Banks have been flooded with applications for Paycheck Protection Program (PPP) loans since the program entered its second round.”
Nonfarm payroll employment rose by 266,000 in April, while the unemployment rate was little changed at 6.1%, according to the U.S. Bureau of Labor Statistics, which noted that job gains occurred in leisure and hospitality and other services.
Credit unions dipped to a 20.3% loan approval rate in April, down a notch from 20.4% in March. However, other non-bank lenders inched up slightly. Institutional lenders approved 23.5% of funding requests in April, up from 23.3% in March, while alternative lenders approved 24% of applications in April compared with 23.9% in March.
“Institutional lenders and alternative lenders saw slight increases in approval rates, but we are still far from where we were before the coronavirus hit,” Arora said. “Hopefully, as the infection rates decline and the economy shows signs of recovery, small business loan approvals should begin a steadier upward trend for all categories of lenders.”
Biz2Credit analyzed loan requests from companies in business more than two years with credit scores of more than 680. The results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s platform.
