Small businesses are having an easier time getting loans from big banks as opposed to small banks, according to the February 2015 Biz2Credit Small Business Index. February indicated the high point since the Great Recession, showing an increase of 12.5% in lending approvals since last year. It's been a growing trend, as 11 of the past 12 months have seen an increase in loan approval rates.
Why Big Banks?
According to the Biz2Credit release, big banks can keep fixed loan expenses down with conventional loans, as opposed to smaller banks that use SBA-backed funding. Also bigger banks are using faster technology that helps them assess the risk of default more quickly, allowing for faster approval rates.
The result is 60.7% approval of small business loans, up from 60.5% in January 2015.
Trends further show that small banks--defined as institutions with less than $10 billion in assets--are declining more than half the applicants in February, the fourth consecutive month that the approval rate has dropped to below 50%.
Online Lending Marketplaces Helping Growth
Large institutional lenders in the past had to buy small business loans on the secondary market, but with the development of online lenders such as Bizlender, investors can buy loans more quickly, easily and directly. Big banks will continue to take market share, forcing out the smaller banks' ability to lend to small business, as the cost of loans increase and interest rates go up.
Funding small business is good business, of course. As institutional lenders, who traditionally invest in corporate, government and municipal debt securities, grow their offerings to small businesses, we may see a surge in the growth potential of small business with a positive influence on the economy.
Unable to secure a small business loan? Consider the faster approval rates of alternative lenders. The professionals at Bizlender can discuss options for increasing your cash flow, despite bad credit, no credit or time constraints. Call 855-404-3070 or visit Bizlender for information today.