According to the Biz2Credit Small Business Lending Index, which is a monthly analysis of 1,000 loan applications on Biz2credit.com, found that approvals at banks ($10+ billion in assets) have jumped from 10.6% in May to 11.1% in June. The rate for June 2011 was 8.9%. Small bank approvals (less than $10 billion in assets) also saw an increase- two percentage points from May to June 2012, ending up at 47.5%.
Rohit Arora, CEO of Biz2Credit, is quoted saying:
“Big banks, which have been under pressure to increase small business lending, have finally started closing deals. CitiBank has become much more active recently.”
Although lending has increased at both small and big banks, lending approvals for credit unions and alternate lenders has decreased. Credit union approval rate fell from 57.6% to 55.8% in June 2012. Some credit unions are reporting they have reached lending limits for the year (currently 12.25% of total assets). Alternate lender approvals drop from 63.2% in May to 62.9% in June.
Arora explains the drop in alternate lending approval rates:”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.” He continues: “If banks are lending, small business owners are less likely to look for other options.”