Lending to small businesses from big banks ( those with $10 billion or more in assets) and institutional lennders continues to climb according to a recently released Biz2Credit Small Business Lending Index report for October.
The report indicates that loan approval rates at big banks improved to 23.5 percent, which is a one-tenth of a percent increase from September’s 23.4 percent. It is important to also note that loan approval rates at the big banks has been increasing for the past seven months.
“Banks want to meet their targets for the year, which means the spigot of small business lending has opened up,” CEO and co-founder of Biz2Credit Rohit Arora said in a press release.
Biz2Credit Lending Index October 2016
Loan approval rates by Institutional lenders also increased by 63.1 percent. This is the fourth month that we are seeing an increase in approval from this quota.
“Institutional lenders are taking advantage of their ability to process loans quickly at very affordable rates,” said Arora. “They are faster and more efficient than other categories of lenders. Quite a few of them are foreign-based investors who are nervous about Brexit and hungry for high yields and low default rates.”
Meanwhile, lending approval rates at small banks remained flat at 48.7 percent in October. Reason: “Small banks are seeking increase in number of closed deals by offering SBA loans. They are feeling the pressure of the increased activity by big banks and institutional lenders, who are strong competitors,” said Arora.
Far less approval are however being realized at alternative lenders and credit unions. Loan approval rates at alternative lenders fell to 59.5 percent while credit unions only approved 41.2 percent of its requests. “Credit unions are struggling to maintain their relevance in small business lending,” Arora said. “They’re becoming an afterthought for borrowers.”
If you are looking to borrow some money for your business, then you know which lenders to target. Figures never lie.
Biz2Credit is an online lending platform that connects business borrowers and lenders. Their monthly lending Index is a representation of more than 1,000 small business loan applications on their platform.