Commercial Business Loans

AB Nichols Finance

In a year-to-year comparison, traditional big bank approval rates have increased over 12 percent. This year alone there was a 19.1 percent increase in approval rates from February 2014 to February 2015.  It’s a great time to transition a business.

The small business-lending environment has been trending up since the end of the recent Recession. Many have attributed the increase in small business lending to the emergence of alternative lenders. Small businesses are getting loans approved by big banks in record numbers – 21.5 percent.  This approval rate has jumped from Januarys approval rate of 21.3 percent, which was a record post-Recession high.

Biz2Credit CEO, Rohit Arora stated that these changes could be tied to a few key differences in the lending environment, “Big banks are starting to grant more conventional loans. This allows them to keep fixed loan expenses down compared to SBA-backed loans, which are not primarily being done at smaller banks. The investment in digitization at big banks has helped expedite the small business loan approval process.”

Conversely institutional lenders were responsible for 60.7 percent of small business loans in February 2015 – a slight increase from 60.5 percent in January 2015. This is mostly due to institutional lenders being able to offer larger varieties of loans that are more appealing to small business owners; it also drastically reflects the way institutional lenders have been able to take their processes online and make it easier for the small business owner. Arora expands, “”The high approval rate in this category of lenders is a reflection of their strong investment in technology advancements, which enables them to quickly assess the risk of default. Thus, they are incredibly efficient; only a miniscule 0.77 percent of loans made by institutional lenders on our platform have defaulted.”

 

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