Banks tightened their small-business lending in September after three months in which they approved more loans, a slowdown that could reflect banks' anxiety over the government shutdown.
Small-business loan approval rates dropped at banks of all sizes in September, according to the monthly report from Biz2Credit, an online loan intermediary. Banks had increased their approval rates during each of the three preceding months and were on track for a record month of approvals during the first half of September, before approval rates slowed in the second half of the month.
For the month, large banks approved 17.5% of small-business loans, down from 17.6% in August, which was the highest level recorded since Biz2Credit began tracking approval rates in 2007. Small banks approved 50.1% of applications, a decline from 50.7% in August, and down from an all-time high of 50.9% in April.
Biz2Credit Chief Executive Rohit Arora blamed the slowdown in the second half on fears of the government shutdown. The decline in approval rates should continue through October, and a potential debt-ceiling crisis could crimp small-business lending further, Arora said.
Credit unions approved 45.4% of small-business loans, up from 45.3% in August, and alternative lenders approved 63.2%, up from 63.1%. It was the third consecutive month in which credit union approval rates rose, after more than a year of steady declines from a peak of 52.4% in September 2012. Alternative lenders have had two straight months of rising approval rates, after declining from a peak of 64.7% in October 2012.