The small business loan approval rate continues to recover


That Biz2Credit The June 2020 Small Business Lending Index reports that small business loan approval rates continue to recover.



Biz2Credit Small Business Lending Index June 2020

Small business loan applications rebounded to 13.5% in June from 11.5% in May, the index shows. The June figures are significantly lower than February 2020, when a record number was recorded before the Covid-19 pandemic. The numbers are based on bank loans rather than government approvals of Payroll Protection Program loans.

Positive signs for small businesses

Recovering loan approval rates are a positive sign for small businesses looking to secure funds to expand or start businesses. Rohit Arora, CEO of Biz2Credit, which oversees the monthly reports, addressed this point, saying, “Across large banks, small banks and all other categories of lenders, the approval rating increased in June. In the North East, the economy is beginning to reopen and there are hopeful signs.

“However, we will have to wait and see how the spread of the pandemic affects the south and west of the country. The coronavirus has made it difficult for small businesses everywhere,” Arora added.

The Biz2Credit Small Business Lending Index analyzes loan requests from more than 1,000 small business owners. The companies that applied for financing on the Biz2Credit platform have been in business for more than two years.

Data from the Biz2Credit Small Business Lending Index

Data shows that smaller banks play a critical role in small business success. Small bank loan approval rates rose to 18.4% in June. This was up from 16.9% in May. In February 2020, credit approval rates were at a much more resilient 50.3%.

keeping Americans in jobs

As of June 30, 2020, Payroll Protection Program (PPP) loans have provided finance to more than 4.9 million small businesses. More than $521 billion in small business funding has helped around 50 million Americans work. That was the determination of a report by the US Small Business Administration (SBA).

The average size of PPP loans is $106,772. To date, 5,460 lenders have participated in the program.

Institutional lenders play an important role in financing small businesses

The number of loans granted by institutional lenders rose steadily from 21.4% in May to 21.6% in June. Borrowing from institutional lenders often means small businesses can get cash quicker. Arora believes that institutional lenders will play an important role in financing small businesses once the economy emerges from the pandemic.

The number of loans approved by credit unions rose slightly to 21.35% in June, from 21.2% in May.

The Biz2Credit Small Business Lending Index for June 2020 provides an optimistic outlook for small businesses and the economy. It also highlights the importance of the availability of small business loans to help businesses navigate these tough times.

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Image: Biz2Credit.com


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