Small businesses are currently struggling to secure the capital they need, despite a slight increase in loan approval rates at some lenders. The latest Biz2Credit Lending Report for September highlights this ongoing challenge. Rohit Arora, Biz2Credit CEO and co-founder, explains that small businesses are grappling with Covid-related issues like supply chain disruptions and a tight labor market, on top of rising interest rates. He emphasizes that access to capital is crucial for these businesses to survive and grow.
The report also provides a breakdown of loan approval rates for September 2022. Small banks and credit unions have seen an uptick in approval rates, but big banks, alternative lenders, and institutional lenders have experienced a decline over the past month. Biz2Credit, an online lending platform, compiles these monthly reports based on loan applications from 1,000 small business owners.
Here’s a closer look at the key data from the Biz2Credit Small Business Lending Index:
- Big Banks: Loan approval rates at big banks (those with more than $10 billion in assets) fell to 14.9%, marking the second consecutive month of decline. Two years ago, these banks had an approval rate of 28.3%.
- Small Banks: Small banks saw their approval rating increase slightly to 21.5% in September, up from 21.4% in August. Two years ago, their approval rate was 50%.
- Institutional Lenders: These lenders saw their approval rates drop to 25.6%, down from 25.9% in August. Two years ago, their loan rate was 66.5%.
- Alternative Lenders: Approval rates at alternative lenders dipped to 27.1% in September, down from 27.3% in August. Two years ago, their approval rate was 55.9%.
- Credit Unions: Credit unions saw their loan approval rate increase slightly to 20.5% in September, up from 20.3% in August. Two years ago, their approval rate was 39.6%.
In summary, while there are some positive signs, access to capital remains a significant hurdle for many small businesses.
