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Biz2Credit August data suggests shutdown inflicted damage

Biz2Credit August data suggests shutdown inflicted damage

Last updated 19th Jan 2022
[caption id="attachment_21543" align="alignleft" width="300"]Biz2Credit’s Small Business Lending Index score for big and small banks dropped by 0.1 points last month, largely due to the July shutdown, the company believes.

Credit union activity declined, with institutional lenders picking up the slack. The institutional approval rate of 61.8 percent was the highest rate among lending categories, a hair above the 61.0 percent rate posted by alternative lenders. The report says alternative lenders approval percentages have declined since the beginning of 2014, which is when institutional lenders began participating in the space.

“Alternative lenders like traditional MCA players are seeing continued customer acquisition as well as pricing challenges,” Mr. Arora explained. “Institutional lenders as a class of investors is growing the fastest as more long-term funding is entering the small business lending space. Institutional lenders are also getting into commercial real estate (CRE) and equipment financing within the small business lending landscape.”

Big banks, defined in the report as those with at least $10 billion in assets, approved 22.3 percent of small business loan requests, down one tenth of a point from July’s 22.4 pace.

The small bank approval rate also dropped a tenth, and now sits at 49.1 percent, making August the tenth consecutive month the segment has denied more than half of submitted loan requests.

Credit unions continued the losing a tenth trend. Their August approval rate sat at 42.8 percent.

Tony Zerucha

Tony Zerucha

Tony Zerucha was the managing editor of Bankless Times. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years, making him one of the senior writers in the alt-fi sector. "The evolution of the crowdfunding and peer-to-peer lending scenes is absolutely fascinating to chronicle. It is a joy to be around people with such passion and vision." Learn More about Tony Zerucha