A monthly analysis of small business loan applications found approval rates higher at small banks and alternative non-bank lenders during December, compared to approvals at bigger banks with $10 billion in assets.
Credit unions, Community Development Financial Institutions (CDFIs), micro lenders, and others approved 62.2 percent of funding requests, barely unchanged from 62 percent in November, according to the Biz2Credit Small Business Lending Index for December 2011.
Within the alternative lender category, credit unions granted 57.4 percent of small business funding requests, up from 57 percent in November. December loan approvals by small banks increased to 47.1 percent, their highest rate of the year, slightly up from 47 percent in November.
Big banks were the only category of lender that dipped at the end of 2011, said Biz2Credit, an online marketplace for businesses seeking loans. Approvals by banks with assets between $10 billion and $50 billion fell in December to 9.7 percent, reversing a three-month upward trend.
“Large banks are coming back in the market, albeit cautiously,” said Biz2Credit CEO Rohit Arora. “However, the big banks wanted to shore up their capital base at end of 2011 and thus reduced their outstanding loan portfolio in December. They are continuing to monitor the European financial crisis, as well as the debt battle in Congress. National and international issues impact big banks more than smaller lenders.”
The biggest trend in small business lending is the “aggressiveness of alternative lenders and continued flip flops on part of big banks in their lending policies to small businesses,” Arora added.
The “alternative lenders” category includes credit unions, CDFIs, micro lenders, accounts receivable financers, and others.
Biz2Credit’s analysis is based on primary data submitted by more than 1,000 small business owners who applied for funding on its online lending platform.
|
Month 2011 |
Big Bank |
Small Bank Approval % |
Credit Union Approval % |
Alternative Lenders |
|
January |
12.8% |
43.5% |
48.9% |
49.3% |
|
February |
11.9% |
43.9% |
49.1% |
51.6% |
|
March |
11.6% |
44.2% |
48.8% |
51.9% |
|
April |
10.4% |
44.6% |
50.1% |
53.6% |
|
May |
9.8% |
45.0% |
51.2% |
53.8% |
|
June |
8.9% |
42.5% |
52.3% |
54.9% |
|
July |
9.8% |
44.9% |
53.4% |
52.2% |
|
August |
9.4% |
43.8% |
54.2% |
58.0% |
|
September |
9.2% |
45.1% |
55.5% |
61.5% |
|
October |
9.3% |
46.3% |
56.6% |
61.8% |
|
November |
10.0% |
47.0% |
57.0% |
62.0% |
|
December |
9.7% |
47.1% |
57.4% |
62.2% |
* Banks with more than $10 billion in assets are classified as “big banks.”
* Credit Unions are considered “alternative lenders.”
* The “alternative lenders” category includes credit unions, Community Development Financial Institutions (CDFI), micro lenders, accounts receivable financers, and others
