NEW YORK–The nation’s big banks approved small business loan applications at a higher rate in July than prior months, while credit unions continue to “struggle,” according to one new analysis.
Also seeing a slight improvement in their approval rates for business loans were institutional lenders, according to the latest Biz2Credit Small Business Lending Index. For all institutions measured, the data applies to non-PPP loans.
The Lending Index found credit unions approved 21.2% of loan requests in July, a slight drop from 21.35% in June, a slight increase from the 21.2% in May 2020.
“Credit unions are grappling and trying to get back in lending,” said Rohit Arora, CEO of Biz2Credit. “Many of them still lag in technology, and they struggle to keep up with other categories of lenders.”
Here’s how other lenders performed:
Big Banks
“The approval percentage for small business loan applications at big banks ($10 billion+ in assets) rose three-tenths of a percent from 13.5% in June to 13.8% in July, according to the Biz2Credit Small Business Lending Index. “The July figure shows an upward trend, even though approval rates are still far below the record highs earlier in 2020 before the coronavirus pandemic hit…The improvements in the labor market reflected the continued resumption of economic activity that was curtailed due to the COVID-19 pandemic and efforts to contain it. July’s notable job gains occurred in the leisure and hospitality, government, retail trade, business and professional services, and health care sectors. Many of those jobs are created by small businesses.”
Small Banks
Biz2Credit reported the approval rate at small banks was 18.6% in July, up two-tenths of a percent from 18.4% in June. “This figure is in stark contrast with February 2020, when small business loan approvals were a robust 50.3%. Overall, the PPP lending program has provided nearly five-million small businesses with more than $521 billion in potentially forgivable loans, directly ensuring 50 million American workers kept their jobs, according to a report by the SBA,” Biz2Credit said. “The average loan size was $106,772, and 5,460 lenders participated in the program thus far. Congress passed legislation that was later signed by President Trump.”
Institutional Lenders
Institutional lenders’ approval percentages increased to 21.9% in July, up from 21.6% in June, the analysis found.
Alternative Lenders
Loan approval rates among alternative lenders dropped three-tenths of a percent to 23.1%, down from 23.4% in June, Biz2Credit said.
The full report can be found here.