Last month, Biz2Credit revealed a startling revelation about small business lending in the U.S. For the first time since the firm began its survey, institutional small business lending surpassed that of alternative lending. Plus, traditional bank lending to SMEs hit an all-time high since the recession.
Biz2Credit’s latest figures suggest that this is a trend that may be here to stay. New figures for June found that big banks and institutional lenders are climbing to new heights when it comes to SME loan application approvals.
Big banks approved more than one-fifth of SME loan applications (22.19 percent) in June this year, yet another increase from the month prior, which saw an approval rate of 21.9 percent. According to Biz2Credit, it makes the eighth month in a row that mainstream large banks have upped their SME lending figures.
“Big banks are increasingly adopting digitization,” said Biz2Credit CEO Rohit Arora in a statement while announcing the survey results. “This makes them more efficient and is of benefit to borrowers, as well. These are the best numbers for big bank lending since the recession.”
The CEO added that small business financing is once again a profitable business. “That’s why we see institutional lenders getting into marketplace lending,” Arora said. “It is a good time for entrepreneurs in search of capital.”
Institutional lenders similarly boosted their SME lending numbers. According to the Biz2Credit survey, 61.4 percent of SME loan applications were approved by the demographic in June, a slight increase from May's 61.3 percent figure.
The trend is not so optimistic for other types of lenders, however. Biz2Credit found that small banks decreased their approval rates for SME loan applicants to 49.3 percent, down from 49.5 percent. According to reports, this marks the eighth month in a row that SME lending was down for small banks.
Meanwhile, alternative lending rates to small businesses remained stagnant at 61 percent. This is a low for the Biz2Credit survey, the company said, and alternative lenders have been steadily reducing their SME lending approval rates since early 2014.
“Small banks need to start adopting to technology quickly,” said Arora in response to the survey’s findings, adding that “alternative lenders offer what I call ‘desperate money,’ and right now, borrowers aren’t desperate.”