Small Increase Noted in Small Business Loan Approval Rates
Loan approval rates continue to slowly rise, but “still nowhere near pre-pandemic highs,” according to Biz2Credit CEO Rohit Arora.
Biz2Credit is an online lending platform, and reports monthly on loan approval rates. The report is based on loan applications from 1,000 small business owners. The report includes loan approval rates through April 2022.
Small Business Loan Approval Rates Rise Slightly
The Federal Reserve continues to raise interest rates, and variable interest rates and also likely to rise, Arora said. And that will directly impact small businesses, and their customers.
“The cost of capital for small business borrowers will rise,” Arora said. “This will have an impact of future borrowing decisions.”
Big Banks (those with more than $10 billion in assets) reached a 15.1% approval rating. That follows a steady increase: 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 20.8% in April, compared to 20.6% in February. Two years ago, the loan approval rate from Small Banks was 50%.
Institutional Lenders saw an approval rate rise a tenth of a point, to 25.4% in April. Past rates were 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 Lenders approval rates rose from to 26.8%, compared to 26.6% in March. Two years ago, the loan approval rate for Alternative Lenders was 55.9%.
Credit Union rates remained steady at 20.6%. The credit union loan approval rates have remained at the position for several months, within a tenth of a point. Two years ago, the loan approval rate from Credit Unions was 39.6%.
Biz2Credit analyzes loan requests from businesses which have been in business for more than 2 years, which also have a 680 points or higher credit rating. Biz2Credit compiles data from more than 1,000 businesses to prepare the report
This article, “Small Increase Noted in Small Business Loan Approval Rates” was first published on Small Business Trends