Small business loan approval rates increased for the fourth consecutive month at small banks, reaching an all-time index high of 50.8%, according to the Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com. This rate marks an improvement from the 50.3% figure in February 2013 and the year-to-year comparison shows a significant increase from the March 2012 figure of 47.6%.

Meanwhile, small business loan approval rates at big banks ($10B+ in assets) decreased slightly in March 2013 to 15.7%, down from the 15.9% rate in February. Despite the drop at big banks last month, approvals by big banks are up 44% from the March 2012 figure of 10.9%.
 
“Small banks are becoming increasingly aggressive in SBA lending, particularly through the SLA and SBA Express program loans," said Biz2Credit CEO, Rohit Arora who oversaw the research. "While big banks have been steadily approving more applications in recent months, uncertainty in the economy is preventing higher rates of approval. Bigger banks are more impacted by external issues, such as the budget Sequester."
 
Credit union approvals of small business loans dropped for the tenth consecutive month to 45.5%, down from 45.9% in February. Approvals by credit unions have dipped 21.4% in a year’s time. Further, small business loan approval rates are now at an all-time Biz2Credit Small Business Lending Index low for credit unions.
 
“Credit union lending has visibly lagged in recent months, despite its boom a year ago. As banks have returned to the small business credit market, the better qualified loan seekers are applying to banks for funding, thereby leaving credit unions with riskier candidates," Arora explained. "For the credit unions to bounce back in small business lending, they must improve their technology and expedite the loan process. It also would be helpful if the government raised the credit unions' member business lending cap (MBL) from 12.25% to 27.5% of total assets."
 
Small business loan approvals by alternative lenders – accounts receivable financers, merchant cash advance lenders, Community Development Financial Institutions (CDFI), microlenders, and others –decreased slightly to 63.6% from the 63.7% rate recorded in February.
 
Biz2Credit analyzed loan requests ranging from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit’s online lending platform, which connects business borrowers with more than 1,100 lenders nationwide.