There’s good news for small business owners looking to pick up a little extra capital – big banks are accepting more of businesses loan requests, according to a new report.
The Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications, has the specifics on the recent business banking boom. Biz2Credit announced that approval rates were at 15.9 percent for February, the highest in the index’s two-year history, up from 15.3 percent in January. The acceptance rate is way up over the figure from the same time last year – in February 2012, it was at 11.7 percent.
Outside of the major banks, the numbers are even better, as the smaller financial institutions are handing out loans more than half the time – 50.3 percent, up from 49.9 percent in January and 47.6 a year ago.
“Smaller banks are making more and more loans through the Small Business Administration; Small Loan Advantage Program, which range in amounts from $50,000 to $350,000 and require little collateral,” Biz2Credit CEO Rohit Arora said. Small business lending is a profitable business. I’m surprised it has taken so long for some players to get back into the game.”
Bankers encouraged to lend more
There’s recently been a movement afoot to enable small banks to lend more easily. According to the St. Louis Business Journal, the Independent Community Bankers of America has launched a “Plan for Prosperity,” designed to expedite small business lending by cutting down red tape, explaining justifications for new rules and offering exemptions from some mortgage reforms. Banks are already responding, as the numbers so far in 2013 show a clear upward trend in lending.
The only sector that’s struggling is credit unions, as the Biz2Credit index showed these institutions declining for the ninth consecutive month. Because banks are accepting more loan applications, that means the less desirable applicants are falling to the credit unions, who are forced to deny those with shaky credit histories. Furthermore, as Arora noted in Business Week, credit union lending is capped at 12.25 percent of an institution’s assets, which cuts down on potential loans.
It’s never been a better time to be a small business owner – the money is flowing, entrepreneurs who need a little extra cash can turn to their local bank for some help.