More small business loans being approved
Small business owners are more likely to get approved for bank loans according to The Biz2Credit Small Business Lending Index. Over the past few years, banks and financial lenders have been stricter on which applicants they will grant business loans to in order to minimize the risk of granting loans and having them go into default.
But the numbers show that big banks have approved more than 17 percent of incoming loan requests, which is the highest reported percentage prior to the Great Depression.
Credit union approval rates are also up
The increased approval ratings are visible across the financial lending spectrum as credit union and alternative lender approval rates are also up to 45.1 and 63.2 percent respectively. Analysts say the increase in approval ratings likely has to do with the Small Business Association’s push to convince more organizations to lend to business owners.
This is great news for businesses that were struggling to find funding resources, as well as owners with lower credit scores as now organizations are more likely to loosen the purse strings. Timing is also on the side of small businesses as tax returns were filed in April; financial institutions have had time to review that data, assess businesses’ ability to pay down debt over the past year and modified their rate of approvals accordingly.
An onslaught of changes this year
Business owners did face an onslaught of substantial changes this year, including the government no longer offering the payroll tax deduction and beefing up healthcare obligations under the Affordable Care Act. But 40 percent of people who responded to The National Small Business Association’s 2013 Mid-Year Economic report say that the economy is better off than it was five years ago.
This isn’t to say to say that business owners are worry free, but outlooks are generally more positive as entrepreneurs have a greater likelihood of getting approved for a business loan than they would have at this point last year.