NEW YORK, 08 Dec. 2020 (GLOBE NEWSWIRE) – Small Business loan approval percentages at big banks ($ 10 billion and more in assets) fell slightly from 13.3% in October to 13.2% in November, an indication that the challenges for small business owners in need of financing continue, according to the latest Biz2Credit Small Business Loan Index™ released today. In comparison, the big banks approved 28.1% of the funding requests they received in November 2019.
“Even though many companies are operating at a loss right now and need capital, they are discouraged from applying for funding because of the likelihood or rejection as approval rates drop and because there is so much economic uncertainty caused by the coronavirus, ”said the CEO of Biz2Credit. Rohit Arora, one of the leading national experts in small business financing. “Business owners are eagerly awaiting the enactment of a second Paycheck Protection Program (PPP) that would provide forgivable loans to survive the current pandemic outbreak. Without significant federal support, small businesses across the country will be struggling. Many of them will not survive.
The US Bureau of Labor Statistics’ Jobs report on Friday, December 4, revealed that non-farm payroll employment increased by 245,000 in November and the unemployment rate edged down to 6.7%. Improvements in the labor market reflect the continued upturn in economic activity that has been hampered by the coronavirus pandemic and efforts to contain it. Notable job gains took place in transportation and warehousing in November, as holiday gifts hit stores and consumers. Employment also increased in professional and business services and health care.
“A study this week reported that over 30% of small businesses in New Jersey have closed. It would have seemed inconceivable less than a year ago. My fear is that if a government stimulus package is not enacted, even more companies will go bankrupt, ”Arora said. “As the virus appears to be on the rise again, local governments may impose tighter restrictions on the operations of restaurants, gyms and other businesses. This would put great pressure on businesses that are already unlikely to survive any longer without help. “
During the month of November, small banks approved 18.3% requests for financing from companies, down a notch from 18.4% the previous month. In contrast, small banks granted more than half (50.5%) of financing requests last November.
“This dramatic drop is attributed to the toll the coronavirus has taken on small businesses and the economy in general,” Arora said.
Likewise, vsrepeat unions slipped two tenths of a percent to one 20.7% approval rate in November compared to 20.9% in October. A year ago, they approved nearly 40% of the applications received in November 2019.
Two categories of lenders edged up in November. Iinstitutional lenders approved 22.6% funding requests in November, up slightly from 22.5% in October. Meanwhile, loan approval rates among alternative lenders slightly increased from 23.3% in October to 23.4% in November. These figures once again highlight the challenges facing small businesses in search of capital. Last November, institutional lenders approved nearly two-thirds (66.1%) of their funding requests, and alternative lenders granted 56.3% of their requests.
“Institutional lenders are looking for returns, so they’re ready to provide finance, just like alternative lenders, such as FinTech companies. Despite these two small positives, companies looking for capital find it difficult to secure it. Business owners are looking to the government for help, ”said Arora.
About the Biz2Credit Small Business Loan Index
Biz2Credit analyzed loan applications from businesses that have been in business for more than two years with credit scores above 680. The results are based on primary data submitted by over 1,000 small business owners who have applied for financing on the Biz2Credit platform.
Founded in 2007, Biz2Credit has arranged over $ 3 billion in small business financing. The company extends its cutting-edge technology into customized digital platform solutions for banks and other financial institutions, investors and service providers. Visit www.biz2credit.com or Twitter @ Biz2Credit, Facebook, and LinkedIn.
Media contact: John Mooney, (908) 720-6057, [email protected]