[Joseph Esparza]

"Biz2Credit’s data shows that approval rates from cash advance companies and other non-bank lenders dropped for the ninth straight month."
http://smallbiztrends.com/2014/11/sm...iz2credit.html

[CreditGuy]

This seems like desired behavior. Lenders are optimizing their origination process to declines deals which have no chance of getting approved earlier in the process, and using historical performance to better identify those applications that will not only convert at a higher rate, but also pose lower risk of default. Further, lenders and ISOs are getting better at identifying target businesses, creating contact that coverts to applications, and generally taking more applications, so while the approval rate fell I suspect that this is due to more application volume across the space increasing the denominator, rather than lenders becoming more risk adverse. (Not to mention lead chasing saturation that results in lenders getting 5, 6, 12 apps for the same business, which also inflates the denominator) That said, given that competitive pressures within the non-bank SMB lending space have driven more aggressive UW and offers, a lower approval rate might actually mean that those that are getting approved are getting larger offers and, on balance, more capital is reaching the market. Approval rate is only one part of the picture, and given the growth trajectory of the non-bank lending space, this is probably a poor metric to judge performance and the efficacy of capital delivery.

[Joseph Esparza]

And this thread is closed! Great perspective CreditGuy, refreshing answer.