The Biz2Credit Small Business Lending Index for May 2018 is reporting record highs of loan approval from banks and institutional lenders.
Biz2Credit Lending Index May 2018
The record highs reflect a strong US economy and job growth. The Bureau of Labor Statistics reports the unemployment rate is currently at 3.8%. And wage growth is also experiencing the highest rate in two years according to the latest Paychex/IHS Markit Small Business Employment Watch.
For small business owners and entrepreneurs looking to expand or start their fits venture, this is a good time. Biz2Credit CEO Rohit Arora addressed this very point in the report. He said, “The U.S. economy is strong right now.” This has benefitted banks, making May another strong month.
Arora added, “The unemployment rate hit an 18-year low, and average hourly pay rose 2.7 percent from a year prior. Notably, the Labor Department reported employment in construction continued on an upward trend in May with more than 25,000 new jobs created. There were also large increases in manufacturing, transportation and warehousing jobs.”
The index is derived from the monthly analysis of more than 1,000 credit applications from small businesses on Biz2Credit.com.
Data From the Biz2Credit Small Business Lending Index
The rate of approval from big banks has jumped to 25.9%, up two-tenths of a percent from April. And according to Biz2Credit, this is a post-recession high for big banks.
The growth big banks experienced was also matched by small banks, with their two-tenths of a percent jump increasing its overall approval rate for small businesses to 49.4%. For this segment, this rate was the highest since 2015.
Institutional lenders, which generally have a high rate of approval for small business loans, were up by one-tenth of a percent to 64.7%. Biz2Credit is reporting this is yet another new Index record for this group.
Alternative lenders and credit unions didn’t see the same growth as the other lenders in this index. While alternative lenders remain the same as April with an approval rate of 56.4%, the rate for credit unions was down by one-tenth of a percent to 40.1%.
The Biz2Credit Small Business Lending Index infographic below provides more data for the month of May.
This article, “Small Business Loan Approval Rates Hit Record High, Biz2Credit Reports” was first published on Small Business Trends