Lending by Big Banks to Small Businesses Hits a Record High, Study Finds

14. February 2018.

Upon seeing this headline and then reviewing the underlying story, one realizes that there should be an addendum titled “well, not exactly”. In effect the posting is referencing a survey-based small business index with data around loan approval rates, not specifically volumes or types of loans. So the point is to read through, perhaps link out to the referenced index data, and see if you continue to feel good. Regardless, the indication is that small business lending may be on the upswing, someone one might intuitively expect if an economy is indeed growing at rates we have not seen since before 2007.

In 2017, approval rates from these financial institutions hit record highs, according to the latest small business lending index from online lending marketplace Biz2Credit, which analyzed more than 1,000 small business loan applications.

In a recent research report titled Dodd-Frank and Corporate Banking: Still Murky After All These Years, Mercator looked at some government bank data from 2017 across all of commercial banking and determined that small business C&I loans were down somewhat from previous years, so it behooves the interested reader to further study other pieces of lending data to gain a more complete picture. However, always nice to see some good news.

The big banks’ approval rate of 25 percent of small business loans represents a record high. What’s even more eye-opening is that institutional investors like pension funds have an approval rate of more than 64 percent — another historical high.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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