the Biz2 Credit The Small Business Loans Index for June 2020 shows that small business loan approval rates continue to rebound.
Biz2Credit Index of Small Business Loans June 2020
Small business loan applications rebounded from 11.5% in May to 13.5% in June, according to the index. The figures for June are significantly lower than those for February 2020, when a record figure was recorded before the Covid-19 pandemic. The numbers are based on bank loans rather than government Payroll Protection Program loan approvals.
Positive signs for small businesses
The rebound in loan approval rates is a positive sign for small businesses looking to raise funds to expand or start businesses. Highlighting this point, Rohit Arora, CEO of Biz2Credit, which oversees the monthly reports, said: “Big banks, small banks and all other categories of lenders saw their approval percentages increase in June. In the northeast, the economy is starting to reopen and there are signs of hope.
“However, we will have to see how the spread of the pandemic affects the south and west of the country. The coronavirus has made things difficult for small businesses around the world,” Arora added.
The Biz2Credit Small Business Loan Index analyzes loan applications from over 1,000 small business owners. Companies that have applied for funding on the Biz2Credit platform have been in business for over two years.
Biz2Credit Small Business Loan Index Data
Data shows that small banks play a central role in the success of small businesses. Loan approval rates at small banks increased in June to 18.4%. This is up from 16.9% in May. In February 2020, loan approval rates were much more robust at 50.3%.
Keep Americans in the Job
As of June 30, 2020, Payroll Protection Program (P3) loans have provided financing to more than 4.9 million small businesses. The $ 521 billion in funding small businesses received has kept about 50 million Americans working. It was the conclusion of a report by the United States Small Business Administration (SBA).
The average P3 loan size is $ 106,772. 5,460 lenders have participated in the program so far.
Institutional lenders play an important role in financing small businesses
The number of loans granted by institutional lenders increased steadily, from 21.4% in May to 21.6% in June. Borrowing from institutional lenders often means that small businesses can get their hands on cash faster. Arora believes institutional lenders will play an important role in financing small businesses as the economy emerges from the pandemic.
The number of loans approved by credit unions edged up, from 21.2% in May to 21.35% in June.
The Biz2Credit Small Business Lending Index for June 2020 offers a bullish outlook for small businesses and the economy. It also shows the importance of the availability of small business loans to help businesses get through these tough times.
READ MORE:
Image: Biz2Credit.com
