Small Business Loan Approval Rates Climb, But Not Fast Enough
Loan approval rates continue to slowly rise, but not fast enough, according to the Biz2Credit Lending Index, released April 12. “Small business lending has not fully recovered,” said Rohit Arora, Biz2Credit CEO. “This is disappointing news for companies looking to grow their businesses.”
The report includes loan approval rates through March 2022. Although approval rates are rising, they’re rising incrementally, just a tenth of a percentage each month.
April Biz2Credit Small Business Lending Index
Supply chain issues are impacting the timing of loans, Arora said, “Small businesses are sometimes having to borrow money when inventory is available,” he said. “And buy more than they typically would need in order to hedge against shortages.”
Arora added that he doesn’t see the loan timing/need issue ending until supply chain issues ease, which is “very hard on small businesses.”
Big Banks (those with more than $10 billion in assets) reached a 14.9% approval rating during March, up from 14.7 in February and 14.5% in January.
Two years ago, the loan approval rates for Big Banks were 28.3%.
The approval rating for Small Banks grew to 20.6% in March, compared to 20.5% in February. Two years ago, the loan approval rate from Small Banks was 50%.
Institutional Lenders saw an approval rate rise incrementally from 25.1% in January, 25.2% in February, to 25.3% in March.
Two years ago, the loan rate for Institutional Lenders was 66.5%.
Alternative Lender’s approval rates rose from 26.5% in February to 26.6% in March. Two years ago, the loan approval rate for Alternative Lenders was 55.9%.
Credit Union loan approval rates, which had stayed the same for two months (20.7%) decreased slightly to 20.6%. Two years ago, the loan approval rate from Credit Unions was 39.6%.
How Biz2Credit Compiles the Report
Biz2Credit analyzes loan requests from businesses that have been in business for more than 2 years, and that also have 680 points or higher credit ratings. Biz2Credit compiles data from more than 1,000 businesses to prepare the report.
This article, “Small Business Loan Approval Rates Climb, But Not Fast Enough” was first published on Small Business Trends