Small Business Lending Approvals Hit New High Among Big Banks
It’s now been nearly a decade since the 2008 financial crisis that brought some of the world’s largest banks to their knees and even put Lehman Brothers out of business. While many banks were initially skittish about lending following the crash, that’s slowly turned around as the initial storm blew over. Now, as the Washington Post reports, small business loan approvals from big banks have hit a record high.
For the month of January, more than one in four small business loan applications submitted to large banking institutions (those with assets in excess of $10 billion) were approved. Moreover the approval rate moved up to 25.3% in January from a previous record of 25.2% the month prior. Speaking on these findings, Biz2Credit CEO Rohit Arora said, “Despite some recent bumps, the economy has done well during President Trump’s first year in office, and tax cuts have also added to optimism among small business owners. With the economy showing such good signs, the number of small business owners applying for loans has risen. They are showing confidence and are willing to take risks.”
Loan approvals were also up at smaller banks in January, reaching 49.1% from 49% in December. As the Post notes, while its shy of the 50% approval rate seen in October of 2014, this figure is still a historical high. Meanwhile small business loans from institutional lenders were flat from last month, sticking at 64.3%. On the other side of the coin, loans from credit unions continued to slip, now sitting at 40.3% from 40.8% one year ago.
These latest findings jive with other positive signs we’ve seen from the small business community. For example 2017 saw the National Federation of Independent Business’s Optimism Index reach its highest yearly average ever, besting 2004 for the honor. Additionally the rising approval rates could serve to grow that optimism even more. Then again the strong possibility of increasing interest rates also have the potential to dampen some of the excitement among small business borrowers. Regardless of those details, it continues to appear like 2018 will be a good year for entrepreneurs and their businesses.