The end of the Paycheck Protection Program (PPP) is here, and this means businesses are going to look for funding from traditional sources. According to the Biz2Credit Small Business Lending Index for May, loan approval rates have increased for banks and non-bank lenders.
Small Business Lending Index – May 2021
Although the higher approval rates are not huge, it is heading in the right direction for owners looking for funding. At big banks, ($10 billion+ in assets) the jump was just 0.1 percent from April (13.4%) to May (13.5%). The increase in small banks was slightly higher going from 18.2% in April, to 18.7% in May.
Credit Unions had the same increase as big banks with approval rates of 20.3% in April, to 20.4% in May. Ditto for institutional lenders with the same slight increase approving 23.6% of loans in May, from 23.5% in April.
On the other hand, alternative lenders fared better approving 24.3% of funding applications in May 2021, compared to 24.0% in April. Biz2Credit CEO Rohit Arora, says these lenders are handling a larger number of loan requests. He attributes the increase to the shift towards online finance in the small business space.
Arora added, “With the conclusion of PPP, banks are focusing on forgiveness and may not be ready to ramp up small business lending that is not government-backed.”
Small Business Loans to See a Jump
Arora says there is pent-up demand from consumers. Add to this the post-pandemic economy and small businesses are set to experience noticeable growth. And to manage this growth many owners will be looking for loans. This Arora says is going to make next month’s lending figures significant, especially from online or digital providers.
Brighter Economic Outlook
The pandemic is on its last leg as more people get vaccinated. And this is going to bode well for businesses of all sizes as more people venture outside their homes. And with summer just around the corner, the timing could not be more perfect for small business owners to recoup the losses of the past year and a half.
Take a look at the Biz2Credit infographic below for the rest of the data.
This article, “Small Business Loan Approval Rates Increase as PPP Closes” was first published on Small Business Trends
Source: Small Business Trends