Lending North America

Biz2Credit Finds Small Business Loan Approval Rates Are Down More Than 50% Compared to 2019

Small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.3% in October to 13.2% in November, an indication that the challenges for small business owners in need of financing continue, according to the latest Biz2Credit Small Business Lending Index. In comparison, big banks approved 28.1% of the funding requests they received in November 2019.

“Even though many companies are operating at a loss right now and need capital, they are discouraged from applying for funding because of the likelihood or rejection as approval rates drop and because there is so much economic uncertainty caused by the coronavirus,” said Biz2Credit CEO Rohit Arora. “Business owners are anxiously awaiting the enactment of a second Paycheck Protection Program (PPP) that would provide forgivable loans to survive the current pandemic surge. Without significant federal assistance, small companies all across the country will struggle. Many of them will not survive.”

The US Bureau of Labour Statistics’ Jobs Report on Friday, December 4, found that nonfarm payroll employment rose by 245,000 in November, and the unemployment rate edged downward to 6.7%. The improvements in the labour market reflect the continued resumption of economic activity that was curtailed by the coronavirus pandemic and efforts to contain it. Notable job gains occurred in transportation and warehousing in November as holiday gifts are on their way to stores and to consumers. Employment also rose in professional and business services, and health care.

“A study this week reported that more than 30% of small businesses in New Jersey have closed. This would have seemed inconceivable less than a year ago. My fear is that if a government stimulus package is not enacted, even more businesses will go under,” Arora said. “As the virus seems to be spiking again, local governments may enact tighter restrictions on the operations of restaurants, gyms, and other businesses. This would put a great strain on businesses that are already not likely to survive much longer without help.”

During November, small banks approved 18.3% of business financing applications, down one notch from 18.4% the month before. In sharp contrast, small banks granted more than half (50.5%) of funding requests last November.

Similarly, credit unions slipped two-tenths of a percent to a 20.7% approval rate in November from 20.9% in October. A year ago, they approved almost 40% of the applications they received in November 2019.

Two categories of lenders rose slightly in November. Institutional lenders approved 22.6% of applications for funding in November, slightly up from 22.5% in October. Meanwhile, loan approval rates among alternative lenders rose slightly from 23.3% in October to 23.4% in November. These figures again shine light on the challenges for small companies in search of capital. Last November, institutional lenders approved nearly two-thirds (66.1%) of their funding requests, and alternative lenders granted 56.3% of their applications.

“Institutional lenders are looking for yields, so they are willing to provide funding, as are alternative lenders, such as fintech companies. Despite these two small bright spots, companies seeking capital are having a tough time securing it. Business owners are looking to the government for help,” Arora said.


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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