Big Banks' Small Business Loan Approval Rates Increase By 30% In September
According to the Biz2Credit Small Business Lending Index, a monthly report on 1,000 small business loan applications on Biz2Credit.com, approval rates for small business loans grew by 30% in September. Biz2Credit’s analysis shows that small business loan approval rates jumped from 10.9% in August to 14.2% in September among large lenders such as Citibank, Sovereign and Citizens Bank. September’s approval rates are the highest since the Index was created in 2011.
Despite Improvement, Bank Approval Rates Remain Much Lower Than Alternative Lenders
Although approval rates among big banks are improving, they are still significantly lower than approval rates among alternative financing providers, including merchant cash advance lenders, micro lenders, accounts receivable financers, and other financing sources. Approval rates among alternative lenders was 64.6% during September.
It is important to not that Biz2Credit only analyzed loan applications from firms that had been in business a minimum of 3 years.Â Additionally, the average applicant’s credit score was above 680. Business owners who have only been in business for a short time or have bad credit are not likely to benefit from the reported increase in small business loan approvals. However, direct lenders like Horizon offer greater opportunities for new businesses and entrepreneurs who require bad credit business loans.