Loan approval rates continue to rise slowly, but “still far from pre-pandemic highs”, according to Biz2Credit CEO Rohit Arora.
Biz2Credit is an online lending platform and publishes monthly loan approval rate reports. The report is based on loan applications from 1,000 small business owners. The report includes loan approval rates through April 2022.
Small business loan approval rates rise slightly
The Federal Reserve continues to raise interest rates and variable interest rates and is expected to rise as well, Arora said. And it will have a direct impact on small businesses and their customers.
“The cost of capital for small business borrowers will increase,” Arora said. “This will impact future borrowing decisions.”
Large banks (those with more than $10 billion in assets) achieved an approval rating of 15.1%. This follows a steady increase: 14.9% approval rating in March, compared to 14.7 in February and 14.5% in January. Two years ago, loan approval rates for major banks were 28.3%.
The approval rating for small banks rose to 20.8% in April from 20.6% in February. Two years ago, the loan approval rate for small banks was 50%.
Institutional lenders saw their approval ratings rise by a tenth of a point to 25.4% in April. Previous rates were 25.1% in January, 25.2% in February to 25.3% in March. Two years ago, the lending rate for institutional lenders was 66.5%.
Alternative lender approval rates fell from 26.8% to 26.6% in March. Two years ago, the loan approval rate for alternative lenders was 55.9%.
Credit union rates remained stable at 20.6%. Approval rates for credit union loans have remained flat for several months, at less than a tenth of a point. Two years ago, the credit union loan approval rate was 39.6%.
Biz2Credit analyzes loan applications from companies that have been in business for more than 2 years, which also have a credit score of 680 points or higher. Biz2Credit compiles data from over 1,000 companies to prepare the report
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