Of the more than 1,000 small businesses that applied for funding on Biz2Credit’s online lending platform in July, loan approvals from credit unions are continuing to slow down.
The firm 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.
The firm found that July 2012 loan approval rate of credit unions dipped to 54.6%, down from 55.8% in June. The figure represents the lowest approval rate for credit unions since August 2011, when the figure stood at 54.2%, according to Biz2Credit.
Some credit unions have reported that they had reached their member business lending limit, which currently is 12.25% of their total assets, said Rohit Arora, CEO of Biz2Credit.
“While credit union approvals slowed, alternative lenders picked up the slack with their highest approval rating since we began measuring the category,” Arora said in a statement. “Alternative lenders should continue to reap the benefits of capped out credit unions.”
Alternative lenders include accounts receivable financers, merchant cash advance lenders, community development financial institutions, and micro lenders.
In July, alternative lenders approved 64.1% of loan requests, up from 62.9% in June and nearly 12 percentage points higher than a year ago. The 64.1% approval rate was the highest figure since the Biz2Credit Small Business Lending Index began in 2011.
Meanwhile, Biz2Credit said loan approvals at banks with less than $10 billion in assets have also dropped slightly to 47.4% in July from 47.5% in June. This figure however is still up two and a half percentage points from 44.9% last July, according to the data.
Arora said Biz2Credit continues to see more mid-sized banks reemerge in the market. “Big banks, which have been under pressure to increase small business lending, are continuing to close more deals,” he added.