Small business loan approval percentages at big banks (more than $10 billion in assets) rose slightly to 13.5% in March from 13.3% in February 2021, according to the Biz2Credit Small Business Lending Index. In comparison, in March 2020, big banks approved 15.4% of the funding requests they received.
“Traditional big bank lending rose slightly in March, but small business loans are still much harder to obtain now than they were before the pandemic,” Rohit Arora, CEO of Biz2Credit, said. “Right now, banks have been focused on making Paycheck Protection Program loans to small businesses. These loans are backed by the treasury, so there is little risk to them.”
Biz2Credit, a processor of PPP applications since mid-January, found PPP loan requests represent an overwhelming percentage of applications made via the online platform in 2021.
Small banks’ approvals bumped up a notch to 18.3% in March compared with the 18.2% approval rate in February. In contrast, small banks granted 38.9% of their small business loan applications in March 2020.
“Approvals of traditional business loans and SBA loans at small banks are less than half of what they were prior to COVID,” Arora said.
Credit unions rose from a 20.3% approval rate in February to a 20.4% approval rate in March. A year ago, credit unions approved 23.2% of the applications they received.
Other non-bank lenders inched up slightly in March. Institutional lenders approved 23.3% of funding requests in March, up from 23.1% in February. Meanwhile, approval rates among alternative lenders rose from 23.8% in February to 23.9% in March.
“All categories of lenders improved slightly in March 2021, but we are nowhere near the approval rates we saw pre-pandemic,” Arora said. “These figures are encouraging because the approvals are trending upwards.”
Biz2Credit analyzed loan requests from companies in business more than two years with credit scores above 680 to compile the data for the Biz2Credit Small Business Lending Index.