The loan origination process is hardly simple, especially as the economy continues to work its way back to a full recovery. Financial institutions want to ensure that they are making quality investments and choosing creditworthy borrowers.
A recent report from Biz2Credit shows that small business loan approvals from large banks hit a six-year high last month. Specifically, banks with at least $10 billion in assets approved 17.4 percent of small-business loan applications in July, which is a 50 percent increase from that time one year ago.
"The 2012 tax returns have provided the big banks with financial information that indicates many small businesses are doing better now than they were during the past few years," Biz2Credit CEO Rohit Arora, who oversaw the research, said in a company press release. "Thus, the banks are more willing to allocate capital for small business loans, resulting in the uptick in approval rates."
Additionally, credit unions also approved more loans for small businesses, according to the "Biz2Credit Small Business Lending Index." A total of 45.1 percent of loans were given the go-ahead, which ended a 13-month period where approval rates sharply declined.
On the other end of the spectrum, smaller bank approvals dropped slightly to to 49.4 percent in July from 49.8 percent in June. According to Arora, this could be due in part to larger institutions cutting into their market share, as big banks often have better brand recognition and the ability to offer better rates.
Financial institutions of all sizes can benefit from loan management software, so that they can know that each decision is the right one for short- and long-term stability.