By: Julie Story
Small businesses are lending in greater numbers as more banks open up access to credit once again, according to new industry market reports.
The latest�Biz2Credit Small Business Lending Index found that loan approval rates for small companies reached new records in December 2012, with both big banks and community institutions increasing their approval rate. According to the data, small business loan approval rates at big banks increased to�14.9 percent, marking a 13 percent jump from November and representing the highest approval rate from big banks the index has ever recorded.�
Small banks also increased their approval rate to�49.8 percent from 49.2 percent in November 2012. Year-to-year comparisons reveal that the small bank approval rate in December 2012 was also up from that of December 2011, which was 47.1 percent. Although big banks are opening up lending at greater speeds, community institutions maintain higher rates of approval and�greater consistency in extending small business banking products.�
While banks of all sizes have expanded credit access, the study found that credit unions have reversed their business lending trends as approval rates fell to 48.4 percent in November to 47.6 percent in December 2012. While the rate of approval remains high among credit unions, these institutions are playing a larger role in the small business sector, as owners move away from the rigid terms of big banks in search of more affordable financing options. This scenario affords credit unions, which are typically in a position to offer more advantageous interest rates, the opportunity to attract more small business clients by loosening the reins on credit.�
Rohit Arora, Biz2Credit co-founder and CEO, noted that credit unions may benefit from updating their procedures to keep pace with big banks, which have made progress in automating their lending processes.�