According to a January analysis of 1,000 funding requests at credit unions, small banks and other alternative lenders, the three groups approved business loans at higher levels than big banks over the past 12 months.
Biz2Credit, which connects lenders with small and medium-sized businesses, said credit unions granted 57.6% of small business funding requests in January. That percentage is an increase from 57.4% in December.
Loan approvals by small banks increased to 47.5% in January 2012, up from 47.1% in December, to reach their highest rate in the past year, the firm said. Approvals by large banks rose to 11.7%, the highest percentage since Feb 2011, when 11.9% of small business loans were granted.
Community development financial institutions, accounts receivable financers, merchant cash advance, micro lenders, and others approved 62.4% of the funding requests, up from 62.2% of funding requests in December, according to Biz2Credit’s small business lending index, which tracked 1,000 applications made through the firm.
“Optimism seems to be returning. We have seen a 35% increase in month-to-month volume of new loan applications, which is a good sign,” said Biz2Credit CEO Rohit Arora.
Biz2Credit's analysis found that loan request amounts ranged from $25,000 to $3 million, that the average credit score was above 680, and that average-time-in-business was slightly more than two years.
Banks with assets between $10 billion and $50 billion are starting to come back in the market, albeit cautiously, as they monitor the European financial crisis and the U.S. debt debate, according to Biz2Credit.
“There is an increase in startups looking for funding, and many of their needs are not fully addressed by traditional lending institutions,” Arora said.