Biz2Credit’s Small Business Lending Index reveals that non-bank lenders are providing better lending opportunities to small businesses after the collapse of Silicon Valley Bank.
After Silicon Valley Bank collapsed, Biz2Credit Small Business Lending Index found borrowers had better luck with non-bank lenders. According to today’s Biz2Credit Small Business Lending IndexTM, big banks’ small business loan acceptance rates fell from 14.2% in February to 13.8% in March. Big banks’ lowest figure since July 2021. Small bank company loan acceptance rates fell from 21.3% in February to 19.1% in March.
Non-bank lender approvals increased in all Biz2Credit Index categories as bank lending to small firms dropped.
- March saw 28.4% alternative lenders, up from 27.9% in February.
- Institutional investors funded 26.5% of requests, up from 26.3% in February.
- Credit union approval rose to 20.2% in March from 20.0% in February, reversing a year-long slump.
SVB’s failure affected small company owners’ trust. They quickly withdrew their deposits from small and midsize banks. That hampered bank lending. Thus, it has become much difficult for enterprises to get capital,” said Rohit Arora, CEO of Biz2Credit, one of the nation’s leading experts in small business finance and fintech.
Arora stated that bank approval rates were far higher in the first ten days before the Silicon Valley Bank (SVB) and Signature Bank collapses than in the last days of March, when businesses removed deposits from small and midsized banks.
“Even though the majority of small businesses did not lose their deposits, their faith in the banking system became shaken,” Arora said. SMBs with funds over $250,000 left smaller banks. They invested in larger banks.”
“Small business owners will always choose safety over service,” he said. “While small business owners’ worst fears may not be justified, their confidence in the banking system has not been fully restored—and it may not for a while. This hinders financing, causing a credit bottleneck for small businesses.”
Biz2Credit examined loan
On Friday, April 7, the Bureau of Labor Statistics released its March Jobs Report, which showed 236,000 more nonfarm payroll jobs and a 3.5% unemployment rate. Leisure and hospitality, government, professional and business services, and healthcare added jobs. Small enterprises create many of these employment. Biz2Credit examined loan requests from two-year-old enterprises with credit scores above 680 to calculate its Small Business Lending Index. Over 1,000 small business owners that applied for funding on Biz2Credit provided the data.
Biz2Credit has funded almost $7 billion in small businesses since 2007. The company is developing tailored digital platform solutions for banks, investors, and service providers using its industry-leading technology.
