Small business loan approval rates at large banks fell from 13.9% in August 2021 to 14% in September. Small bank approvals also fell from 19.3% in August to 19.5% in September. The data comes from the latest Biz2Credit Small Business Lending Index.
Biz2Credit Small Business Loan Index – September 2021
The increase in loan approval rates for small businesses comes as unemployment continues to decline.
In September 2021, total non-farm payroll employment increased by 194,000. In the same month, the unemployment rate fell from 0.4% to 4.8%, according to the latest statistics from the Bureau of Labor.
The data also shows that there have been notable employment gains in leisure and hospitality, retail, professional and business services, as well as transportation and housing.
Rohit Arora, CEO of Biz2Credit, commented on the positive outlook for small businesses and employment: âBusiness owners are investing in their businesses and banks are increasingly willing to lend. These are good signs for the small business economy.
âEvery category of lenders, including bank and non-bank lenders, has seen their loan approval percentages increase each month for the past five months,â continued Arora.
Higher approval rates among non-bank lenders
Small business approval rates of non-bank lenders also increase over the same period. Non-bank lenders are an important source of funding for businesses that need to secure funds quickly.
Institutional lender approvals rose to 24.5% in September, from 24.3% in August. This type of loan is up 2.3% compared to the same period a year ago.
Alternative lender approval rates have also increased, from 25.2% in August to 25.4% in September 2021. This is significantly higher than in September 2020, when funding requests from alternative lenders were 23.1%.
Credit unions, which specialize in meeting the needs of small businesses, saw a similar increase, up a tenth of a percent in September 2021 from August. They were, however, down from 21% in September 2020.
The Small Biz Loan Index
The Small Biz Lending Index analyzes data from over 1,000 small business owners who apply for financing on the Biz2Credit platform.