For the third consecutive month, Biz2Credit said business loanapprovals at credit unions continued to drop at the company.

The company's Biz2Credit Small Business Lending Index tracked1,000 of its applications to compare loan approval rates amongbanks and credit unions.

The New York firm that connects businesses with financialinstitutions reported that credit union loan approvals dipped inAugust to 52.9%, the lowest percentage since June 2011.

The slowdown is partially caused by a reported lending cap outby many credit unions, which may only lend 12.25% of their assets to small businesses, Biz2Creditsaid.

“In the case of credit unions, we are seeing the continuedimpact of the 12.25% MBL ceiling, as well as sluggishness in credit unions'willingness to book new business,” said Rohit Arora, Biz2Creditco-founder and CEO.

Banks with more than $10 billion in assets also experienced adrop in loan approvals going from 11.3% in July to 10.9% in August.Biz2Credit said the decrease comes off an upswing in approvalsduring May and June.

“The issue with big banks is a combination of global creditissues and regulatory pressure to keep their underwriting standardstight so that they can meet their underlying capital ratios,” Arorasaid.

Meanwhile, banks with less than $10 billion in assets increasedloan approvals in August to 47.8% from 47.4% in July. The figurerepresents the highest approval rating percentage for small bankssince Biz2Credit began the index in 2011, the company said.

“The SBA lending program being pushed by small banks hasincreased their approval rates,” Arora said.

Alternative lenders including accounts receivable financers,merchant cash advance lenders, community development financialinstitutions, micro lenders, and others, also picked up the slack,approving 64.5% of loan requests, up from 64.1% in July and 6.5%higher than August 2011 approvals, Biz2Credit said.