"Big banks, which have been under pressure to increase small business lending, have finally started closing deals. CitiBank has become much more active recently."
New York, NY (PRWEB) July 10, 2012
With summer's arrival, banks have jumped head-first back in the small business lending. The Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2credit.com, found that approvals in June by big banks ($10B+ in assets) jumped a half percentage point to 11.1% from 10.6% in May 2012. The figure was well above the paltry 8.9% approval rate a year ago in June 2011.
Additionally, small bank lending jumped to 47.5% in June 2012, up two percentage points from 45.5% in May 2012 and up a full five percentage points higher than the 42.5.% approval rate in May 2011.
"Small banks are the big story this month. They have made a lot of SBA 7(a) express loans, which used the be the strength of the largest banks. Mid-sized banks, such as Sovereign, have really picked up their efforts in small business lending and are pursuing this market aggressively," explained Rohit Arora, CEO of Biz2Credit, who oversaw the research. "Big banks, which have been under pressure to increase small business lending, have finally started closing deals. CitiBank has become much more active recently."
The June 2012 loan approval rate of credit unions fell to 55.8%, down from 57.6% in May. Some credit unions have reported that they had reached their yearly lending limit, which currently is 12.25% of total assets. Senator Mark Udall (D-CO), has introduced the Credit Union Small Business Jobs Bill (S. 2231) that would raise the credit union business lending cap to 27.5 % of total assets from the current figure of 12.25%. By raising the cap, credit unions would be able to increase the number of small business loans they make.
Alternate lenders also decreased, dropping their lending approval rate to 62.9% from a peak of 63.2% in May 2012.
"When traditional lenders, get back into the game, it impacts the alternative funders, such as factoring and merchant cash advance companies, which generally charge higher interest rates than banks do," Arora explained. "If banks are lending, small business owners are less likely to look for other options."
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 online platform connects business borrowers with more than 1,100 lenders nationwide.
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 business’ 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 secured more than $650 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.