Small business loan approval rates at big banks (more than $10 million in assets) rose from 14.7% in February to 14.9% in March, and approval rates at small banks (under $10 billion in assets) increased from 20.5% in February to 20.6% in March, according to Biz2Credit’s Small Business Lending Index.
Among several categories of non-bank lenders, approval percentages also climbed. Institutional lenders approved 25.3% of funding requests in March, up one-tenth of a percent from 25.2% in February. Alternative lenders’ approval rates rose from 26.5% in February to 26.6% in March. However, credit unions’ approval rates fell one-tenth of a percent to 20.6% in March after being stagnant for two months.
“When the COVID-19 pandemic began in March 2020, loan approval percentages were almost double what they are today for banks and non-bank lenders,” Rohit Arora, CEO of Biz2Credit, said. “Two years later, small business lending still has not fully rebounded. This is disappointing news for companies looking to grow their businesses.
“Because of supply chain issues, small businesses are sometimes having to borrow money when inventory is available and buy more than they typically would need in order to hedge against shortages. I don’t see this changing until supply chain issues ease. Big corporations can weather the storm; it is harder for SMBs.”
Biz2Credit analyzed loan requests from companies in business more than two years with credit scores above 680 for the index. The results are based on primary data submitted by more than 1,000 small business owners that applied for funding on Biz2Credit’s platform.