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Small Business Loan Approval Rates

by Erica Farmer
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All Lenders’ Small Business Loan Approval Rates Continue to rising

Small company loan acceptance rates at large banks have risen again, from 14.1 percent in October to 14.2 percent in November.

Small bank lending is increasing.

Aside from big banks’ lending to small businesses, small bank approvals also increased during the same time period. The percentage of loans authorized by small bank lenders climbed from 19.7 percent in October to 19.9 percent in November, according to the study.

Higher Approval Rates at Non-Bank Lenders

A similar pattern can be observed among institutional lenders, whose approval rates increased from 24.7 percent in October to 24.8 percent in November. Alternative lenders have also been granting more small company finance requests, with approval rates increasing from 25.6 percent in October to 25.8 percent in November.

Credit unions, where approval rates of 20.6 percent in October remained unchanged in November, are the only lender category that has not seen lending growth.

“Encouraging” data

Rohit Arora, CEO of Biz2Credit, one of the nation’s leading specialists in FinTech and small business finance, described the recent results as “encouraging.”

“Every kind of lender had their loan approval percentages improve this month, with the exception of credit unions, which stayed steady.”

Bank approval rates are growing, although more slowly than we would have wanted by now.

During the same time period, unemployment fell.

The Biz2Credit Small Business Lending Index Report for November 2021 also considers data from the Bureau of Labor Statistics Jobs Report. According to the statistics, unemployment has decreased by 0.4 percent to 4.2 percent. Professional and business services, as well as transportation, warehousing, construction, and manufacturing, saw the most significant job growth.

Despite a reduction in unemployment in several businesses, the retail sector reported a drop in employment throughout the month.

There are reasons to be optimistic about the year 2021. Discover why small company owners and lenders are bullish on business funding. Small company owners were dealt terrible blows in 2020, but there are reasons to be optimistic about 2021.

Credit card companies and lenders are back in business, which implies that cash will be easier to come by.

Technology will continue to play a significant role in assisting small company owners with cash flow management.

This post is intended for company owners who wish to learn about the small business funding trends for 2021.

Despite the devastation caused by the COVID-19 pandemic, there are reasons to be optimistic about the year 2021:

A vaccine is being distributed, another round of the Paycheck Protection Program is on the way, and lenders are once again open for business.

According to a recent poll conducted by Capital One, 67 percent of small company owners are confident that their operations and income will recover to pre-pandemic levels in 2021.

Meanwhile, 60% of small business owners believe the US economy will perform well in the coming year.

“In 2021, people are feeling a lot more hopeful,” Sameer Gulati, President, and COO of Plastiq told us.

“Everything should start reopening and expanding again in the third or fourth quarter.”

That is not to imply that things will return to normal for the average small company owner. During the epidemic,

millions of businesses were harmed, with many forced to close their doors permanently. Those who have hung on and survived, on the other hand, will have more financing options than in 2020.

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Credit card companies are expanding their credit limits

For starters, consider company credit cards and loans. As soon as the epidemic hit, lenders and credit card firms in the United States reduced credit limits and slowed lending.

This made an already terrible situation intolerable for many small enterprises that required finance to keep operations running.

Traditional lending providers had a tremendous knee-jerk response and pulled back strongly in March.

Loans have become increasingly difficult to get, increasing the number of business bankruptcies,

“Gulati said.” It was the first time in the credit card industry that lines were reduced in a matter of days or weeks.

During the 2008 and 2009 recessions, banks and credit card companies took months to respond, but advances in technology and integration with business bank accounts make it much easier to spot and respond to red flags in 2020.

As we approach 2020, credit card firms are better equipped to assess COVID-19 risk and are more willing to offer credit.

However, higher credit is not available to everyone. According to Gulati, credit lines are expanding for industries that have held up during the epidemic, including e-commerce, healthcare, construction, and professional services.

Lenders are now open for business

In 2021, not just business credit card issuers will be open for business. According to Lendio CEO Brock Blake, banks, credit unions, internet lenders, and fintech are ready and able to give capital to small business owners.

“We anticipate the SBA increasing the guarantee from roughly 85 percent to 90 percent,” Blake added. “That will improve lender confidence” in issuing an SBA loan.

More lenders will serve small businesses as liquidity improves. This means that financing will be inexpensive for business owners with strong credit.

Banks and credit unions will also play a role in business lending, but alternative lenders and fintech are likely to be the primary loan issuers in 2021. After all, investors aren’t receiving much return

outside of the stock market, and with less COVID-19 uncertainty, they’d rather lend their money.

“A lot of money is flooding the non-bank lending market because bond yields are low,” Matthew Gillman, CEO of SMB Compass, explained. Alternative lenders are looking forward to the new year.

Alternative lenders are looking forward to the new year. There will be plenty of liquidity, but it will not be in the form of bank funding.

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