In the wake of the recession, most major banks were less willing to extend lines of credit to both consumers and business alike. But as the economy continues to make notable gains, this trend could be reversing.
According to a report from the Washington Post, based on data from business lending platform Biz2Credit, the nationwide small business approval loan rate spiked to 17.4 percent in July, marking nearly a 50 percent gain from a year earlier.
“Banks reporting stronger loan demand most often cited increases in customers’ funding needs related to investment in plant or equipment, inventories, and accounts receivable as the top reasons,” the report said.
One lending expert claims this development is based on the tax returns filed by small businesses earlier this year. By examining these documents, big banks have the ability to see just how well many small business are performing in the stabilizing economy and are subsequently more likely to allocate capital for these organizations.
Meanwhile, the bulk of these originations have emerged from the commercial and industrial loan sector. Small businesses subscribed to these areas of the economy and planning to expand in the near feature could benefit from examining their commercial insurance policy to ensure it’s up-to-date.
However, tax reports aren’t the only pieces of financial information lenders have examined in the last year. In addition, a report from Experian and Moody’s Analytics indicates the credit standing of small business improved considerably during the first three months of 2013.