SBA loan approval rate
Small business lending saw positive figures in 2017 as there was a high SBA Loan approval rate of 64.3% from institutional investors. The rising interest rates and less restrictive regulation of the banking industry have helped create an excellent atmosphere for small business lending.
Since December 2015, the Federal Reserve has increased their rates. The interest rates surged about four times compared to the previous year. The Great Recession that caused the credit crunch made the central bank lower interest rates. As the rates were close to zero percent, borrowers were happy. This situation has changed as rates have been rising in the past couple of years.
Because of political reasons, this situation is more likely the trend for the next years. As the economy performs well coupled with a low unemployment rate, lots of economies across the world have stabilized after the recession.
With the higher interest rates for the banks, more profits will come their way when they cater to small business borrowers. In November 2017, a rare trend happened when the approval rate for lenders in every category rose. Big banks that had assets amounting to $10 billion approved 25.1% of applications. Institutional lenders also granted about 64.1% of the requests.
Under the current administration, the bank regulations are also subsiding. Within a year, the US president signed a Congressional resolution that allowed banks to block customers from filing class-action lawsuits.
The Small Business Administration (SBA) has also catered more borrowers in the past years which can be seen in the SBA loan approval rate. This agency changed its requirements for equity for Commercial Real Estate Loans. In the form of equity investment, more borrowers can now expand their small business. With this lending atmosphere, more banks are also encouraged to be a part of the market.
As the current administration managed to cut taxes, more business owners are confident in the coming years. The pro-business atmosphere in the country also helped borrowers be more optimistic in growing their small businesses and paying their money back.
In November, the SBA loan approval rate at small banks rose up to 49% from 48.9% in October. SBA-backed loans come in large volumes in the community and regional banks.
The recent figures that were released by the SBA are stunning. It’s good news for young companies and startups that don’t have a strong credit history. The lending situation in the country is now friendlier for these businesses after the post-recession credit crunch.
Are you a small business owner who wishes to secure funds with SBA? Know that it’s important to know if you’re eligible for one. Keep in mind that SBA loans can be hard to qualify for, but with the surge of the US economy, more borrowers are welcome to apply for loans. Know more about SBA loans and how to be eligible for each by reading our articles related to this.