Credit unions’ approval rates for small business loans dropped to 39.7% in September 2019 – a record low, according to the Biz2Credit Small Business Lending Index.
For big banks and community banks, on the other hand, small business lending approval rates remains strong. Following the recent Fed announcement that interest rates would drop, business lending will likely continue to grow for these banks in 2019.
“Other categories of lenders are all moving to digital applications. I would say that credit unions have lost their way in small business lending in today’s low interest rate environment,” said Rohit Arora, CEO of Biz2Credit, in a press release. “Banks and institutional lenders are more aggressive in small business lending.”
Despite the fact that credit unions’ member business lending (MBL) is capped at 12.25% of assets, there are several key areas to bolster this segment and serve more members. Not only is small business lending a critical portfolio to capture for business, but it also helps to support credit unions’ mission to support local businesses and communities.