Big banks, which request proof of three years of profitability, are now receiving applications from companies whose fortunes increased from 2011-2013. Borrowers are opting for non-SBA loans from big banks because these loans require less paperwork and generally are granted faster than SBA loans. Meanwhile, small business loan approvals at small banks dipped to 48.7% in December from 49.7% in November. Despite experiencing an uptick in loan approval rates in November, approvals at small banks have stalled, in part because of the backlog of SBA loan processing and because big banks are becoming more active in small business lending. In a year-to-year comparison small business lending approval rates at small banks are down by a slight margin of a little over 2 percent. Non-SBA business loans have gained in popularity over the last month. This, in turn, hurts smaller banks, which process a lot of SBA loans, explained Arora, one of the nations leading experts on small business finance. Less paperwork is involved in non-SBA applications, and the loans are typical processed 7 to 10 days quicker than SBA loans. Thus, non-SBA loans are more appealing to borrowers. Meanwhile, credit unions, which had been on the lending rebound, experienced a decrease in approval rates in December.
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