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CUs outdo banks in small-biz loans according to Biz2Credit Small Business Lending Index

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From March 2011 through May 2012, credit unions have approved a higher percentage of loans each of those months than big banks, those with more than $10 billion in assets, and small banks, those with less than $10 billion in assets. See chart to compare the loans.

Credit unions' May 2012 loan approval rate increased to 57.6 percent, up 0.2 percent from April and up more than six percentage points than in May 2011.

Also, alternative lenders--which include account receivable financers, merchant cash advance lenders, community development financial institutions, micro lenders and others--increased their loan approval rate to 63.2 percent in May from 63 percent in April.

A drop in small-business loan approvals comes after a Jobs Report issued on June 1, which found that only 69,000 jobs were created in May while unemployment rose to 8.2 percent.

"This is the third month in a row that big bank lending to small businesses dropped," said Rohit Arora, CEO of Biz2Credit, who oversaw the research. "Small banks decreased their lending approvals for a second straight month, as well. Combined with another poor jobs report, continued jitters in Europe and uncertainty on Wall Street, the economy looks like it is slowing. Look for both Mitt Romney and President Obama to debate where the country is economically from now until Election Day. One thing cannot be denied--lending for small businesses, which create the lion's share of new jobs, has stalled."

Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's online lending platform.

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' member business lending (MBL) cap to 27.5 percent of assets from 12.25 percent. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

To view the index chart, click here.

Story courtesy of CUNA News Now