Big banks in the U.S. continue to increase their lending to SMEs, according to the latest data from Biz2Credit.
Announced Wednesday (March 15), the Biz2Credit Small Business Lending Index concluded that large banks increased their SME loan approval rates to 24.1 percent in February. According to researchers, this is the seventh month in a row in which large banks have increased SME lending activity.
“There is a confidence in the economy right now, and that is translating to higher loan approval rates at mainstream lending institutions,” said Rohit Arora, Biz2Credit CEO. “Small business owners are optimistic that there are bright days ahead and are applying for capital to invest in growing their businesses.”
But the news for SME borrowers isn’t all positive: Small banks reduced their SME loan approval rates for the first time in six months, the report found. Alternative lenders’ SME loan approval rates also continued to decline slightly.
Institutional investors, meanwhile, saw their loan approval rates tick up in February.
“This stock market and U.S. dollar are very strong, and this is attracting a high volume of investors from various parts of the world,” Arora explained. “Small business lending is still one of the most profitable sectors to invest in, and we are seeing a number of yield-hungry investors getting involved in this space of loans.”
Biz2Credit’s analysis was published the same day the PayNet Canadian Small Business Lending Index was released. That report found a decline in SME lending in Canada in January, a residual effect of the drop in oil prices in June 2015.
“Still,” said PayNet president Bill Phelan, “overall, private companies have been digging themselves out.”
Researchers noted that a steady 1.11 percent of small businesses were 30 days or more behind on loan repayments, signifying ongoing financial health of SMEs in Canada.