The year’s half over and the results for small business lending are in: volumes and approvals for lines of credit are way down and even booked SBA loans are lagging (see chart). That’s according to Curinos’ LendersBenchmark for Small Business.
Small Business Lending – Applications vs. Bookings by Product
YoY Delta through June 2025
Source(s): LendersBenchmark for Small Business Originations. < $5MM commitment amount
Lines of credit applications and bookings showed consistent declines, even though they continue to be the majority of small business credit arrangements. Even when these businesses pursue a secured line of credit, our data show a dramatic reduction in booked loans.
Term loans were declining from 2023-24 but are now the primary category showing a rebound, driven by secured loans with booking sizes of over $500k. But because of stricter underwriting guidelines and reinstating fees, even SBA loans have become less attractive, further compounding the tightening of credit options.
What’s causing the shifts?
- Bankers could be guiding customers away from certain credit products or collateral models that may be out of reach.
- Credit underwriting standards and lender risk appetite might be tightening so applications are accepted but not getting booked.
- Lower booking levels may be a signal that credit quality is truly on the decline. If so, this could be an early warning sign of broader economic pressure.
One thing is clear: the banking sector is displaying hesitation. Our advice to lenders? Communicate clearly to business owners what their banks can and cannot support and align the products being offered with the realities that they’re facing today.
Small businesses are looking for banks who have confidence in their ability to weather macroeconomic pressures beyond their control. Ask yourself: are you the right bank for them?
