Credit unions' small business loan approval rates back on the rise
Credit unions' approval of small-business loan requests jumped in May after reporting declines for several months.
The industry approved 21.2% of small business loan requests in May, an increase from 18.1% in April, according to a press release on Tuesday from Biz2Credit about its Small Business Lending Index. This figure does not include loans made through the Small Business Administration’s Paycheck Protection Program.
Credit union approvals for small business loans had hit record lows for the prior three months, according to the April index.
“Big banks, small banks, and all other categories of lenders saw their approval percentages rise in May – after a horrendous April,” Rohit Arora, CEO of Biz2Credit, said in the press release. “Now that coronavirus cases are going down, the economy is beginning to reopen. I hope things get back to a ‘new normal’ quickly. Otherwise, many small businesses could fail.”
Banks with at least $10 billion in assets approved 11.5% of applications in May, up from 8.9% a month earlier. Smaller banks granted funding for 16.9% of requests, up from 11.8% in April.
Institutional lenders approval rates increased to 21.4%, from 18.1% in April, and alternative lenders granted requests in 20.5% of requests, up from 15.2% in April, according to the index.
“Some borrowers are seeking funding from alternative lenders because the turnaround time is so quick, and small business owners were desperate for cash,” Arora said in the press release. “Although they may not again reach pre-coronavirus levels, alternative lenders certainly play a role in small business lending.”