SBA Office of Advocacy Reports Weak Small Business Loan Supply and Demand
In the last year and a half, bankers have been reporting tightened credit standards and weaker demand for C&I (commercial and industrial) and CRE (commercial real estate) loans. The SBA Office of Advocacy reports that loan demand has dropped more than it did around the pandemic.
Business lending grew between June 2022 and June 2023. Total C&I loans grew at a slower rate from the previous year; from 5.9% to 2.1% growth. Small business C&I loans ($1 million or less) grew by 2.6% after two consecutive declines.
The Office of Advocacy states that bank delinquency rates for both C&I and CRE loans remain near historic lows. For the first time since 2015, CRE loan delinquency rates surpassed C&I rates in the last quarter. Typically higher than C&I and CRE rates, credit card delinquency rates have been steadily increasing since 2021.
Among all lenders, small business loan approval rates have yet to fully rebound back to pre-pandemic rates. Traditional lenders have relatively flat approval rates between 2021 and 2023. Alternative lenders have had a slight increase in approval rates.