Another month brings another record high small business loan approval rate by big banks.
The July Biz2Credit Small Business Lending Index reports this was a strong month for small business lending approvals. Strong economic numbers including higher wages are driving lenders to give small businesses the funds they need to grow in this environment.
Biz2Credit CEO Rohit Arora, who oversees the Index, explained this environment in the report. Arora said, “The Fed rated the economy as strong this month, and the Jobs Report found that the economy keeps adding jobs in many sectors. In addition, there is optimism among small business owners. All of these factors create an atmosphere that is ripe for small business lending.”
He goes on to say owners are investing more in their businesses because they are able to secure funding.
With lenders across all sectors approving more loans, entrepreneurs with their first startup or established small business owners now have more growth and expansion opportunities.
When it comes to big banks, the upward trend has been going on for more than a year. Compared to July 2017, when the approval rate at big banks stood at 24.5%, this rate has now increased by almost two percentage points to 26.3% in 2018.
The rate was also up for the month with an increase of two tenths of a percent from 26.1% in June to 26.3% in July.
According to Arora, banks are more bullish with small businesses because they have been creating many of jobs driving the current economy.
This includes jobs for workers with limited technical skills. The unemployment rate for people without a high school diploma fell to 5.1% in July, the lowest rate since 1992, which is when the government started collecting data on this segment.
The numbers from the Bureau of Labor Statistics (PDF) also show the hourly earnings for all private sector employees rose by 7 cents or 0.3 percent in July, an increase of 2.7% so far for the year.
Lending by small banks increased by one-tenth of a percent to 49.7% in July, and institutional lenders, alternative lenders and credit unions remained the same at 64.8%, 56.5%, and 40.3% respectively.
The July Biz2Credit Small Business Lending Index infographic provides more information.