Small business loan approval interest in large banks (assets over $ 10 billion) jumped from 13.6% in June 2021 to 13.8% in July, the same percentage as a year ago, according to the latest Biz2Credit ™ Small Business Lending Index. Approval rates at major banks are roughly half of what they were in early 2020 before the COVID pandemic.
Overall, the economy has recovered quite well, with many small businesses re-investing in their companies. Approval rates have increased in both large and smaller banks, including regional and public banks, which are increasingly partnership with FinTechs digitize the small business loan application process. Small bank approval also rose from 18.9% in June to 19.1% in July. However, in early 2020, small banks approved more than a half their loan requests.
Large banks are still relatively stingy in providing loans to small businesses. This opens up opportunities for smaller banks and other lenders to gain market share. Meanwhile, some small business owners can still benefit from government programs even after PPP lending under the Payroll Protection Program was closed in May.
The SBA announced last week that Grant to operators of closed sites (SVOG) Applicants seeking economic assistance for small businesses, nonprofits and entertainment venues can apply for new funding by 23:59 pm Friday, August 20, 2021. To date, SVOG has provided $ 8.4 billion in grants to more than 10,800 businesses to help put national cultural institutions back on track, which are critical to the economy and were among the first to shut down.
While SVOG Application Portal As it moves closer to new applicants, the SBA will continue to provide economic assistance to help facilities recover, providing critical assistance through an additional awards program. Later this month, the SBA will launch an additional SVOG program for 50% of the original remuneration amountwith a maximum amount of $ 10 million (initial and additional). Details will be announced later.
In addition, to ensure that no eligible seats are left behind, the SBA is currently accepting, by invitation, applications for re-scrutiny of prizes and appeals. This rare opportunity gives candidates the opportunity to prove their eligibility and reverse a previous decision.
“The Indoor Operator Grant was our lifeline. The grant allowed us to return to full-time work, including staffing and programming, ”said Michael Moran, President and CEO of the company. Palace, theater in Stamford, CT. “At the beginning of 2020, we planned to close in just three to four weeks. As the pandemic continued to intensify, our fears were never renewed. The palace closed for 15 months and expenses continued to pile up despite a bleak income outlook. The SVOG grant through the SBA saved us, and it can be credited not only with our recovery, but with the recovery of the entire theater district in Stamford. “
Institutional lenders approved 23.9% of applications in July, up one tenth of a percent from 23.8% of requests for funding in June and two full percentage points higher than a year ago. Meanwhile, the number of approved alternative lenders rose by two tenths of a percent from 24.5% in June to 24.7% of funding applications in July 2021. Last year, the July percentage of alternative lenders was 23.1%. Credit unions approved 20.5% in July, the same percentage as the previous month but down from 21.2% last year in July 2020.
Non-bank lenders are a viable source of capital for small business owners, including those owned by women and minorities. Why? Non-bank lenders generally pay less attention to FICO scores and more to the financial health of borrowers who apply for funding.
Accion, a non-profit microlender, has a long history of helping small businesses, especially minority-owned firms. Accion provides loans through Fund of Opportunitieswho has a proven track record of supporting a diverse client base. Almost 90% of small business borrowers are women, people of color or immigrants. Over the past 25 years, the lender has transferred over $ 500 million to business owners.
During the pandemic, small business owners learned to pay attention to many different sources of capital, including government aid programs and non-bank lenders, as banks were slow to offer traditional term loans to small businesses. The key is not to resort to one type of lender, especially if the approval rate is low. Do your research and look for new funding opportunities.