Small business loan approval percentages in large banks (over $ 10 billion in assets) fell from 13.8% in July 2021 to 13.9% in August, up three tenths of a percentage from a year ago. Meanwhile, approvals of small banks also fell from 19.1% in July to 19.3% in August, according to the latest Biz2Credit Index of Small Business Loans. The approval percentage at smaller banks is up eight-tenths of a percent from last year.
“Small businesses are borrowing again to improve their cash flow and for growth,” said Rohit Arora, CEO of Biz2Credit, one of the nation’s leading experts in small business finance. âApproval percentages have increased in both large and small banks. “
The total number of nonfarm jobs increased by 235,000 in August and the unemployment rate fell 0.2 percentage point to 5.2%, the Bureau of Labor Statistics reported on Friday, September 3. services, transportation and warehousing, private education and manufacturing. Many of these jobs are created by small businesses.
Institutional lenders approved at 24.3% in August, up from 23.9% of funding requests in July and 2.2 percentage points from a year ago. Meanwhile, approved alternative lenders increased nearly 1%, from 24.7% in July to 25.2% of funding requests in August 2021. Last year, August’s percentage for lenders alternatives was 23.0%. Credit unions approved 20.5% in August, the same percentage as the previous two months, but down from 21.1% in August 2020.
âNon-bank lenders continue to be a good source of capital for small business owners,â Arora said. âThey generally focus less on FICO scores and more on the financial health of borrowers applying for financing. This is especially true for institutional lenders and alternative lenders.
Biz2Credit analyzed loan applications from businesses that have been in business for more than two years with credit scores above 680. The results are based on primary data submitted by over 1,000 small business owners who have applied for financing on the Biz2Credit platform.