The Biz2Credit Small Business Lending Index for May 2018 reports record loan approvals by banks and institutional lenders.
Biz2Credit Loan Index May 2018
The record highs reflect a strong US economy and job growth. The Bureau of Labor Statistics reports that the unemployment rate is currently 3.8%. And wage growth is also seeing the highest rate in two years according to the latest Paychex/IHS Markit Small Business Employment Watch.
For small business owners and entrepreneurs looking to expand or start their business, now is a great time. Biz2Credit CEO Rohit Arora addressed this specific point in the report. He said, “The US economy is strong right now.” This benefited banks, making May another strong month.
Arora added: “The unemployment rate fell to its lowest level in 18 years and the average hourly wage increased by 2.7% compared to the previous year. Notably, the Labor Department reported that construction employment continued its upward trend in May with more than 25,000 new jobs created. There have also been strong increases in jobs in manufacturing, transportation and warehousing.
The index is derived from monthly analysis of over 1,000 small business credit applications on Biz2Credit.com.
Biz2Credit Small Business Loan Index Data
The approval rating for major banks climbed to 25.9%, up two tenths of a percent from April. And according to Biz2Credit, this is a post-recession high for major banks.
Big banks’ growth was also matched by that of small banks, with their jump of two tenths of a percent raising its overall approval rating for small businesses to 49.4%. For this segment, this rate was the highest since 2015.
Institutional lenders, which typically have a high approval rate for small business loans, rose a tenth of a percent to 64.7%. Biz2Credit reports that this is another new index record for this group.
Alternative lenders and credit unions have not experienced the same growth as other lenders in this index. While alternative lenders remain the same as April with an approval rate of 56.4%, the credit union rate fell a tenth of a percent to 40.1%.
The Biz2Credit Small Business Lending Index infographic below provides more data for the month of May.
Image: Biz2Credit
