Approval rates for small business loans are at some of their most optimistic levels since the 2008 financial crisis and the Great Recession, according to new research. Data from Biz2Credit.com shows that big banks–those with $10 billion or more in assets — approved of 21.5% of small business loan applications in February 2015.
This figure is from the Biz2Credit Small Business Lending Index, which is based on a monthly analysis of 1,000 loan applications on Biz2Credit.com. The platform seeks to connect small businesses with potential lenders.
A higher loan approval rate for small businesses at big banks has become a trend. In the last year, 11 of the 12 months saw this loan approval rate increase. Compared to small business loan approval rates in February 2014, this represents a 12.5 percent increase for February 2015.
In a prepared statement accompanying the official release, Biz2Credit CEO Rohit Arora says “Big banks are starting to grant more conventional loans. This allows them to keep fixed loan expenses down compared to SBA-backed loans, which are not primarily being done at smaller banks. The investment in digitization at big banks has helped expedite the small business loan approval process.â€
More small businesses are seeking out loans from so-called institutional lenders, too, the Biz2Credit data continues to find. In February, these institutional lenders approved 60.7% of the loan applications they received from small businesses.
However, the data also shows that to contrary small banks are declining more than half the loan applications they received from small businesses. Biz2Credit reports that smaller banks approved 49.6% of the loan applications they received. Biz2Credit further notes that this rate has been in decline since May 2014.