B2B Payments

Banks Keep SMB Lending Gains Rolling

Small businesses’ access to traditional loans continues to grow as loan applications at big banks reached new heights last month, the latest Biz2Credit data showed.

In its monthly Small Business Lending Index, released Tuesday (Sept. 11), Biz2Credit found that big banks in August approved 26.5 percent of small business loan applications, up 0.2 percent from July. Analysts pointed to overall economic growth as a key factor behind big banks’ willingness to finance SMBs, pointing to better-than-expected second quarter economic growth.

“When you combine a strong economy, healthy retail demand and the willingness of small business owners to reinvest their savings from tax cuts, it creates a positive atmosphere for small business lending,” said Rohit Arora, Biz2Credit CEO, in a statement. “Business owners are bullish on the economy.”

Rising retail sales are a particularly bright spot for small businesses, he continued, adding that the “transportation, logistics, warehousing and construction” industries are also “performing extremely well.”

Regional and community banks also saw their small business loan approval rates increase, with small banks approving 49.8 percent of applications, up one-tenth of a percent from July. According to Biz2Credit, this is the highest approval rate for small banks since November 2014.

Reversing a trend, alternative lenders also saw their loan approval rates increase to 56.6 percent.

Lawmakers are currently probing the U.S. alternative small business finance market in an effort to explore borrower protections.

“Alternative lenders succeed because they are a source of quick capital when small business owners are in a pinch and cannot get a traditional bank loan,” Arora said.

Meanwhile, institutional lenders’ approval rates maintained the same level as in July, while credit unions saw a slight one-tenth of a percent drop in their approval rates, hitting 40.2 percent — a significant decline from their all-time high on the Index with a 57.9 percent approval rating in March of 2012, Biz2Credit noted.

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