Small-Business Lending at Big Banks Hits Post-Crisis Peak: Report

The rate at which banks approved small-business loans rose in August, as large banks approved the highest percentage of loan applications since the financial crisis began.

Banks with $10 billion or more in assets approved 17.6% of their small-business loan applications in August, up from 17.4% in July, according to a survey released Tuesday by Biz2Credit, an online loan marketplace. The August approval rate is the highest for big banks since 2007, when the survey began, and shows an increase of 62% from August 2012, when they approved 10.9% of small-business loans.

The approval rate at small banks also rose, reaching 50.7%, up from 49.4% in July 2013 and 47.8% in August 2012. It was the first time that small banks approved more than half their small-business loan applications since April, when they approved 50.9%, the highest level since the survey started.

"Banks, both large and small, are becoming more aggressive in small-business lending since it has proven to be a profitable part of their portfolios," said Rohit Arora, Biz2Credit's chief executive, in the news release.

The higher approval rates by banks is putting pressure on credit unions and alternative lenders, both of which have seen their approval rates decline over the past year. "Borrowers would rather apply to banks with brand names that they trust, particularly since they are easing their lending criteria and granting more loans than at any time since the recession," Arora said in the news release.

Alternative lenders approved 63.2% of small-business loans, down from 63.4% in July and 64.5% a year ago. The approval rate at credit unions rose to 45.1% in August, from 44.8% in July, the second consecutive month of increases after nearly a year of steady declines.

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