Improvement in Approvals for Companies Applying for Non-CARES Act Loans
The approval percentage for small business loan applications at big banks ($10 billion+ in assets) rebounded from just 8.9% in April to 11.5% in May, according to the Biz2Credit Small Business Lending Index™ released .
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“Big banks, small banks, and all other categories of lenders saw their approval percentages rise in May – after a horrendous April,” said Biz2Credit CEO Rohit Arora, who oversees the monthly research. “Now that coronavirus cases are going down, the economy is beginning to reopen. I hope things get back to a ‘new normal’ quickly. Otherwise, many small businesses could fail.”
The May 2020 figure is still far below the record high rate in February, pre-coronavirus pandemic. The rates do not reflect Payroll Protection Program (PPP) loan approval rates; PPP loan approvals are made by the government, rather than by the banks themselves.
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“The more than 2.5% jump was a pleasant surprise for big bank lending,” said Arora, one of the nation’s leading experts in small business lending. “Toward the end of May, the economy began to rebound from the beating it took at the hands of the coronavirus lockdown. Unemployment dropped from April’s Depression era-levels. Many economic factors are fluctuating tremendously since 2020 began.”
The approval rate at small banks climbed to 16.9% in May from the disappointing 11.8% in April. Just a few months ago, in February 2020, small business loan approvals were a robust 50.3%.
“While smaller banks process many PPP loan requests, they still receive non-PPP applications,” Arora said. “Regional and community banks are playing an important role in the recovery of small businesses.”
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