Merchants More Likely to Get Small Loans as Statistics Show Rising Approval Rates

Micro-business loan approval rates among traditional big banks continue to increase (25.9 percent) hitting a new record high in May 2018 as revealed in last month’s Biz2Credit Small Business Lending Index.

This monthly report studies over a thousand commercial funding applications from SMBs on the on the Biz2Credit’s site.

Big Banks are getting more lenient

Its recent reports say big banks, i.e., those with assets worth $10 billion or more are accepting almost 3 in 10 micro-business loan requests. Plus, approval percentage for May rose two-tenths of a percent from the figure’s which is a remarkable performance for traditional big banks.

Mr. Rohit Arora, Head of Biz2credit and supervisor of monthly index report said May was a “strong month” for big banks because they gained from the overall stability of the economy. He also added that unemployment rates dropped hitting an 18-year low, while average pay-per-hour rose 2.7% up from last year.

Power Industries

Among industries that recorded an upward trend in employment, last May was the Labour Department which created over 25,000 new spaces. “We also saw increases in Manufacturing, warehousing and transportation jobs. The United States has a strong economy right now,” said Arora.

Small Banks not left behind

Local and community banks are also accepting more loan applications. The study found they approved almost 50 percent of their May funding requests, which is the highest figure regional and community banks have recorded as of May 2015.

According to Mr. Arora, small banks design numerous SBA loan products which micro-businesses tap into to get the funds for expansion. “Most of these firms are from the transport, manufacturing and construction sectors, and it is happy to learn that smaller banks are increasingly granting their loan requests,” explained the CEO.

Institutional lenders joining the arena

Institutional lenders also set a new approval percentage record in the Biz2credit index, 64.7 percent. These included lenders like insurance firms, pension funds among others who are now key players in the small business lending arena.

Mr. Arora particularly pointed out that Institutional investors, even from across borders are “seeking high yields and micro-business lending.” He is confident Small business lending is turning into a critical asset for institutional lenders who have the potential to lend at fair interest rates and term periods.”

Alternative Lenders

Acceptance rates for alternative lenders stood at 56.4 percent in May. Approvals for this group of lenders have been slipping by the month for the past two years, except in November 2017 when it experienced a slight uptick. These are the financial providers most retailers visit when they need to get a merchant cash advance. They also offer funds to the discriminated high-risks entities though at higher rates.

In a nutshell,

You are more likely to get funding today from any of the above sources. However, it is important to scan through all of them to point out your best chances, and what fits your firm best.

Author Bio:As an account executive, Michael Hollis has funded millions by helping the get a merchant cash advance. His experience and extensive knowledge of the industry has made him an expert at First American Merchant.