Small business loan approval rates at banks have fallen as a result of
NEW YORK, November 10, 2020 (GLOBE NEWSWIRE) – Small business loan approval percentages in big banks (over $ 10 billion in assets) fell slightly from 13.5% in September to 13.3% in October, demonstrating the challenges of small business owners seeking capital, according to the latest Biz2Credit ™ Small Business Loan Index released today.
“Securing funding for small businesses remains a challenge at this time,” said Rohit Arora, CEO of Biz2Credit, who oversees the monthly research. “Many business owners refrain from applying for credit because they don’t know if their ‘forgivable’ Paycheck Protection Program (P3) loans are canceled.”
“This is a time of great uncertainty for businesses, from sole proprietors to businesses with millions in gross sales,” added Arora, one of the country’s leading experts in small business finance. “I’ve spoken to many business owners who are struggling to hang on and are at risk of falling apart if they don’t get a financial lifeline to survive until the pandemic is over.”
The United States Bureau of Labor Statistics employment report on Friday, November 6, found that non-farm payroll employment increased by 638,000 in October and the unemployment rate fell to 6.9% . These improvements in the labor market reflect the continued upturn in economic activity that had been curtailed due to the coronavirus pandemic (COVID-19) and efforts to contain it, according to the Ministry of Labor. In October, notable job gains were in leisure and hospitality, professional and business services, retail trade and construction. Many of these jobs are created by small businesses.
“Despite these numbers, small business owners are still very concerned. States like New Jersey and Connecticut are considering placing more stringent restrictions on the operations of restaurants and other businesses, ”Arora said. “Until the virus is under control, small businesses will remain in limbo. “
During the month of October, small banks approved 18.4% funding requests, down a tenth of a percent from September’s 18.5 percent figure. Meanwhile, credit unions slipped two tenths of a percent, from 21.0% in September to 20.9% in October.
Two categories of lenders increased slightly. Institutional lenders, which approved 22.2% in September jumped to 22.5% in October. Meanwhile, loan approval rates among alternative lenders, also improved, from 23.1% in September to 23.3% last month.
“Credit activity is starting to come back. Since the banks have been cautious, borrowers have turned to other sources, ”Arora said. “Institutional lenders are looking for returns, so they’re ready to provide finance, just like alternative lenders. “
About the Biz2Credit Small Business Loan Index
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.
Founded in 2007, Biz2Credit has arranged over $ 3 billion in small business financing. The company extends its cutting-edge technology into customized digital platform solutions for banks and other financial institutions, investors and service providers. Visit www.biz2credit.com or Twitter @ Biz2Credit, Facebook and LinkedIn.
Media contact: John Mooney, (908) 720-6057, [email protected]