According to the latest Biz2Credit Small Business Lending Index, small business loan approval percentages at big banks (more than $10 billion in assets) dipped from 15.3% in July to 15.1% in August but rose at small banks from 21.2% in July to 21.4% in August.

Approval percentages improved slightly among institutional lenders and alternative lenders, while credit union lending approvals dipped:

  • Institutional lenders approved 25.9% of loan requests in August, a slight increase from 25.8% in July. Approvals in this lending category have climbed consistently in 2022.
  • Alternative lenders’ approval rates rose from 27.2% in July to 27.3% in August.
  • Credit unions once again dropped from 20.4% in July to 20.3% in August.

“The overall conditions are tightening, and big banks are taking more provisions now,” Rohit Arora, CEO and co-founder at Biz2Credit, said. “Since smaller banks are more active in SBA lending, their approval rates are still strong, as demand for government-guaranteed products is high.

“Inflation is hitting small businesses hard as their input costs have gone up. Thus, they need more working capital. Further, labor shortages have led to companies having to do more with less. Since their automation level is lower than big businesses, higher labor and material costs impact small companies more. “Another cause for concern is that consumer spending is going more towards essential products and services, rather than luxuries and travel. So, I expect a further drop in lending approvals going into fall.”