Loan approval rates continue to rise slowly, with smaller banks and alternative lenders seeing the strongest growth in June. Of all the lenders, loan rates only went down with credit unions, and that was only a 1% drop.
“We are far from pre-pandemic approval percentages, however,” said Biz2Credit CEO Rohit Arora. “Still, these are positive signs.”
“Rising labor costs, combined with inflation of 8.6% in May, continue to put financial pressure on small businesses,” he added.
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 June 2022.
Small business loan approvals edge up
Here’s a look at some key data from the June 2022 Biz2Credit Small Business Lending Index:
Big banks (those with more than $10 billion in assets) achieved an approval rating of 15.4%, up from 15.3% in May. This follows a steady increase: 15.1% in April, 14.9% approval 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 21.1% in June, up from. 20.9% in May. 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 25.6% in June. Previous rates were 25.1% in January, 25.2% in February, 25.3% in March, 25.4% in April and 25.5% in May. Two years ago, the lending rate for institutional lenders was 66.5%.
Approval rates for alternative lenders rose from 26.9% in May to 27.1% in June. Two years ago, the loan approval rate for alternative lenders was 55.9%.
Credit union rates had been steady at 20.6% for several months, but fell to 20.5% in June. Two years ago, the credit union loan approval rate was 39.6%.
How Biz2Credit compiles the report
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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