The latest data from the monthly Biz2Credit Small Business Lending Index suggests a slump in small business lending among U.S. credit unions.
A press release issued on Wednesday (June 13) detailed the May Index’s latest findings, which found that large banks with more than $10 billion in assets are approving of nearly 30 percent of small business loan applications, a two-tenths of a percent increase from April levels. That figure is also a new high for post-recession big bank lending to small businesses.
Small and community banks also saw an increase in small business loan application approval rates, which came in at 49.4 percent for May, a two-tenths of a percent increase from the month before, and similarly a new high for small bank SMB lending since May 2015.
“May was another strong month for banks, as they have benefited from the overall strength of the economy,” said Biz2Credit CEO Rohit Arora in a statement. “The unemployment rate hit an 18-year low, and average hourly pay rose 2.7 percent from a year prior.
“The U.S. economy is strong right now,” he added.
Despite economic strength and traditional bank lending increases, the Biz2Credit survey found a drop in small business loan approval rates at credit unions. Rates hit 40.1 percent for May, a one-tenth of a percent drop from April. The company noted that this is also a record low for the Index.
“Credit union lending to small business has stagnated,” said Arora. “Not much has changed for them in the past couple of years.”
Alternative lenders, meanwhile, saw their approval rates stagnant at 56.4 percent for April. While approval rates did not increase, the May Index suggests the alternative lenders paused their approval date declines recorded every month for nearly two years, researchers said.
“Even in a robust economy, there are still companies that don’t qualify for traditional small business loans because they have not been in business long or have poor credit histories,” said Arora.