The total addressable US small-business lending market is $186 billion, which accounts for only 1% of the total loan market. Today, big banks (assets of $10 billion+) are granting more than one-quarter of the small-business loan applications they receive. The 25.3% approval percentage is another new benchmark for big banks.
However, FDIC reports the total dollar-volume of small-business loans outstanding across all FDIC-insured institutions is down 13% since 2008. According to the Federal Financial Institutions Examination Council (FFIEC), the number of small-business loan originations is down 41.4% since 2008. For comparison, the US economy has grown almost 25% over the same period, according to the US Chamber of Commerce.
Although the approval rates of small-business loans by large institutions is at an all-time high in the US, it’s still only a quarter of applicants that get the necessary funds. As for the developing world, estimates suggest that 65 million, or 40% of micro, small & medium-sized enterprises (MSMEs) have unmet financing needs, resulting in an MSME finance gap in developing countries at $5.2 trillion.
Despite the fact that approval rates from large institutions are at all-time high, about 75% of small-business loans are denied by...
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