At banks with more than $10 billion in assets, 10.2% of loan applications from small businesses were approved in May, down from 10.6% in Aprilâ€”and from 11.7% in January and February, according to surveys of small business customers of Biz2Credit, a Manhattan-based company that matches small businesses with lenders.
Although regional data aren’t available, according to Rohit Arora, Biz2Credit’s CEO, the trend is the same for the New York area. “Lending by big banks has become considerably more sluggish,” he said, noting that at the same time, other lenders, especially alternative ones, are rushing in to fill the gap.
Is this a harbinger of things to come? Is reduced lending by big banksâ€”approval levels should be on the order of 30% to 38%, according to Mr. Aroraâ€”a relatively fleeting phenomenon or the new normal? And will lending in New York continue to follow the pattern of the rest of the country?
The answer: No one really knows yet.
Photo by Billy Brown