Loan approval rates from all types of lenders continue to rise in very small increments, according to the Biz2Credit Small Business Lending Index released February 8.
The report includes loan approval rates through January 2022. Although approval rates are rising, they’re rising in the same slow-growth pattern that’s existed for more than a year.
Approval rates are only marginally higher than they were a year ago, and half as high as they were 2 years ago.
Rohit Arora, CEO of Biz2Credit said that loan approval rates were rising much slower than hoped.
“Loan approval rates are still far below pre-Covid approve levels of January 2020,” Arora said.
Arora added that the slow increase may be tied to interest rates.
Small Business Loan Approvals Continue to Rise
Lenders prefer to approve loans when interest rates are high. Borrowers prefer to borrow money when interest rates are low.
What will happen? Will lenders and borrowers find common ground?
“An expected increase in the interest rate from the Federal Reserve may entice them (lenders) to open the purse strings a little bit more,” Arora said.
February Biz2Credit Small Business Lending Index
Here’s a look at small business loan approval rates at all types of lenders, compared year over year:
Big Banks (those with more than $10 billion in assets) inched up to a 14.5% approval rating during January, up from 14.3% in December.
- January 2021 – 13.2%
- January 2020 – 28.3%
The approval rating for Small Banks grew to 20.3% in December, compared to 20.1 in December.
- January 2021 – 18.3%
- January 2020 – 50.4%
Institutional Lenders saw an approval rate rise incrementally from 24.9 in December to 25.1 in January.
- January 2021 – 23.0%
- January 2020 – 66.4%
Alternative Lenders approval rates rose from 26.1% to 26.3% from December to January.
- January 2021 – 23.7%
- January 2020 – 56.1%
Credit Union loan approval rates rose by 1%, from 20.6 in December to 20.7 in January. November to December, at 20.6%.
- January 2021 – 20.5%
- January 2020 – 39.6%