Where to Look If Banks Deny Your Small Business Loan Application

Small business loan approval percentages at large banks (over $ 10 billion in assets) increased from 13.6% in June 2021 to 13.8% in July, the same percentage as a year ago, according to the latest Biz2Credit Small Business Lending Index ™. The approval percentage at major banks is about half of what it was at the start of 2020 before the COVID pandemic hit.

Overall, the economy has rebounded quite well and many small businesses are investing in their businesses again. Approval rates have increased in both large and small banks, including regional and community banks which are increasingly partnering with FinTechs to digitize the small business loan application process. Small bank approvals also fell from 18.9% in June to 19.1% in July. However, in early 2020, small banks approved more than half of their loan requests.

The big banks remain relatively stingy in granting loans to small businesses. This opens up opportunities for small banks and other lenders to gain market share. Meanwhile, some small business owners can still take advantage of government programs even after the Paycheck Protection Program P3 Loans closed in May.

Last week, the SBA announced that eligible Shuttered Venue Operators Grant (SVOG) applicants seeking economic assistance for small businesses, nonprofits, and live entertainment venues can submit new funding requests until 11:59 p.m. on Friday, August 20, 2021. The SVOG program has so far awarded $ 8.4 billion in grants to more than 10,800 companies to help get institutions back on track cultural heritage, which are essential to the economy and were among the first to close.

While the SVOG application portal will close to new applicants, the SBA will continue to provide economic assistance to help sites recover by providing critical relief through the supplemental rewards program. Later this month, the SBA will open the additional SVOG program for 50% of the original price, capped at a total of $ 10 million (initial and additional combined). Details will be announced at a later date.

Additionally, to ensure that no eligible venue is left behind, the SBA is currently accepting, by invitation, requests for reconsideration of grant amounts and appeals. This rare opportunity gives applicants a chance to prove their eligibility and overturn an earlier decision.

“The grant from operator Shuttered Venues was our lifeline. The grant allowed us to resume all of our activities, including staffing and programming, ”said Michael Moran, President and CEO of The Palace, a theater in Stamford, CT. “At the start of 2020, we had planned to close for only three or four weeks. As the pandemic continued to worsen, so did our fears of never reopening. The palace closed for 15 months as expenses continued to pile up against grim prospects for income. The SBA’s SVOG grant saved us and can be credited not only with our recovery but that of the entire Stamford Theater District.

Non-bank lenders

Institutional lenders approved 23.9 percent in July, up a tenth of a percent from 23.8 percent of funding requests in June and up two percentage points from a year ago year. Meanwhile, approved alternative lenders rose two-tenths of a percent, from 24.5% in June to 24.7% of funding requests in July 2021. Last year, July’s percentage for lenders alternatives was 23.1%. Credit unions approved 20.5% in July, the same percentage as the month before, but down from 21.2% last year in July 2020.

Non-bank lenders are a viable source of capital for owners of small businesses, including women-owned and minority businesses. Why? Non-bank lenders typically focus less on FICO scores and more on the financial health of borrowers applying for financing.

Accion, a not-for-profit micro-lender, has a long history of helping small businesses, especially minority-owned businesses. Accion provides loans through its Opportunity Fund, which has a proven track record in supporting a diverse customer base. Almost 90% of the organization’s small business borrowers are women, people of color or immigrants. Over the past 25 years, the lender has put over $ 500 million in the hands of business owners.

During the pandemic, small business owners learned to look at many different sources of capital, including government assistance programs and non-bank lenders, as banks were slow to offer traditional term loans to small businesses. companies. The key is not to be forced to approach one type of lender, especially if approval rates are low. Do your research and look for new funding opportunities.

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