Biz2Credit Small Business Lending Index Reports Loans to Small Companies Faltered in November as Hurricane Sandy and "Fiscal" Cliff Created Uncertainty in Credit Markets

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Monthly Index Reports Drop in Lending in All Categories of Small Business Lenders

The specter of the Fiscal Cliff has caused some uncertainty in the credit markets, which in turn has led to more scrutinized loan approvals

For the first time since it was created in 2011, four categories of small business lenders -- big banks, small banks, credit unions, and alternative lenders -- experienced lower approval rates, according to the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on in November 2012.

“Hurricane Sandy left much of the northeast devastated and forced small business owners to put future expansion plans on hold,” said Rohit Arora, Biz2Credit co-founder and CEO, who oversaw the research. “Shifted priorities have contributed to this decrease in loan approvals,” added Arora.

After granting more than 50% of small business loan requests in October, small bank approval rates dipped from 50.1% in October to 49.2% in November. However, when making a year-to-year comparison, small banks approved a higher percentage of loan requests in November 2012 than in November 2011, when the rate was 47.0%.

The Biz2Credit Small Business Lending Index also found that 13.2% of funding requests were approved by big banks ($10B+ in assets) last month. This figure represents a drop from October’s approval rate of 14.8%, but shows a year-to-year increase from the 10.0% figure in November 2011.

Alternative lenders – accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), micro lenders, and others – slowed slightly, but continue to make an impact on small business lending. In November 2012, alternative lending approval rates dropped to 64.5%, down from 64.7% the previous month. The figure represents the first drop in alternative lending approvals in more than four months.

Credit union approvals of small business loans dropped for a sixth consecutive month, down to 48.4% from 49.2% in October. While small business lending approvals at credit unions were on the rise during the first five months of 2012, their approval rates have dropped in each of the past six months.

“The specter of the Fiscal Cliff has caused some uncertainty in the credit markets, which in turn has led to more scrutinized loan approvals,” explained Arora. “Lenders may be less inclined to approve requested loans due to the looming tax increases and spending cuts scheduled to start in 2013, which is cause for concern in the economy overall.”

About the Biz2Credit Small Business Lending Index

Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s online lending platform. Biz2Credit’s connects business borrowers with more than 1,100 lenders nationwide.

About Biz2Credit

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers, and complementary business tools. The company matches borrowers to financial institutions based on each business’s unique profile -- completed in less than four minutes -- in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Having arranged $750 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.

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