Magazine article American Banker

Large Banks Approving More Loans for Working Capital

Magazine article American Banker

Large Banks Approving More Loans for Working Capital

Article excerpt

Byline: Alan Kline

Small-business owners seeking working capital loans are getting a warmer reception from large banks these days.

In what appears to be a sign of growing confidence in the economy, banks with $10 billion of assets or more approved 14.2% of small-business loan requests in September, up from 10.9% in August and 9.2% in September 2011, according to a report released Tuesday by the New York firm Biz2Credit.

Many of the loan requests are for working capital loans of less than $1 million a loans many banks have been reluctant to approve following the financial crisis, said Rohit Arora, the chief executive at Biz2Credit. The approval rate was the highest for large banks since Biz2Credit, a five-year-old firm that matches borrowers with lenders, began tracking loan approval rates at financial institutions in early 2011.

"A lot of small businesses say that their revenues are stabilizing and aren't dropping anymore," Arora said in an interview Tuesday. To banks, "these small companies appear less risky."

Approval rates remain well below historic norms, however. Before the crisis, it was not unusual for large banks to approve 40% or more of small-business loan requests, Arora noted.

"Some big banks are coming back into the market, but a lot are still on the sidelines," he said.

Still, evidence is mounting that banks of all sizes are gaining confidence in lending to small businesses. Apart from Biz2Credit's report on loan approvals, the Small Business Administration on Tuesday said that its programs supported $30. …

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