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Biz2Credit’s Small Business Lending Index shows a decline in bank funding rates amid the current banking crisis. Borrowers return to bank lenders.
NEW YORK, May 09, 2023 (GLOBE NEWSWIRE) — The percentage of small business loan approvals in Big banks It fell again from 13.8% in March. 13.5% In April, as the latest Biz2Credit Small Business Loan Index™ Released today. In addition, the approved amounts of business loan applications are at Small banks It is again down from March’s disappointing figure of 19.1% 18.7% In April.
Credit unions The small business loan approval percentage also fell last month, falling to the top 19.8% in April from 20.2% in March.
While small business lending at banks and credit unions continues to decline, approvals from non-traditional lenders have increased in all categories tracked by the Biz2Credit Index.
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Alternative lenders He went up 28.7% In April, it was up 28.4% from March.
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Institutional investors It is given 26.7% April funding requests, up 26.5% from March.
“The instability in banking goes beyond the recent collapse of Silicon Valley Bank (SVB) and Signature Bank. Last week, First Republic Bank, a bank that was more responsible than SVB, was taken over by the FDIC and its assets sold to JPMorgan Chase.” said Rohit Arora, CEO of Biz2Credit, small business finance and fintech.
“While we don’t have full banking yet, these developments will affect banks’ ability to lend to small businesses,” Arora added. “The FDIC insures deposits up to $250,000. The large amount of uninsured deposits in the banking system increases the likelihood of future bank failures. This is bad not only for small businesses, but for the economy as a whole.”
“Exacerbating the financial woes of small firms is the ever-increasing cost of capital, with the Fed raising the base lending rate by another 25 bps to 5% to 5.25%,” Arora said. “The central bank is signaling that this may be the last hike this year, but interest rates are now at their highest level since 2007.”
Overall, nonfarm payrolls rose by 253,000 in April, and the unemployment rate fell slightly to 3.4%, according to the Bureau of Labor Statistics’ Friday, May 5, 2023 jobs report. It grew 4.4% in April from a year ago. Employment continued to rise in a variety of industries, including professional and business services, health care, leisure and hospitality, and social assistance. Most of these jobs are created by small businesses.
“While it’s good news that people are working, the tight labor market hurts the bottom line for small businesses,” Arora said. Companies that need working capital to pay their bills are paying a higher cost of capital for it. This combination creates stress even for prosperous small businesses. Now it’s a Catch-22 situation.”
To determine the Small Business Lender Index, Biz2Credit analyzed more than 680 loan requests from companies that have been in business for more than two years. The results are based on preliminary data from more than 1,000 small business owners who applied for funding on the Biz2Credit platform. To view the April 2023 index, Click here.
In the year Founded in 2007, Biz2Credit has arranged over $7 billion in small business financing.. The company is expanding its industry-leading technology with customized digital platform solutions for banks and other financial institutions, investors and service providers. Visit www.biz2credit.com or Twitter @Biz2Credit, Facebook and LinkedIn.
ConnectJohn Mooney, (908) 720-6057, john@overthemoonpr.com
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