Small businesses fail for many reasons, but one of the biggest is cash flow issues. Fortunately, there is light at the end of the tunnel because the odds are increasingly more in favor of the small business loan borrower.
With cash flow having such an impact on a business’s chances of survival, securing the right funding and enough of it is essential. The following SBA lending statistics could enlighten you on some of your options.
General Small Business Loan Statistics
- Almost one in three businesses fail because they run out of capital, while 42% fail because there’s no need for their services or products.
- Less than half of small businesses are able to access all the financing they need.
- On average, a small business loan amounts to $633,000.
- The average amount of an SBA loan, on the other hand, is $417,316.
- More than two-thirds of small businesses have debt, of one form or another.
Small Business Loan Statistics by Industry
- Roughly 15% of small business loans are received by the renovation and construction industry.
- In second place is trucking and transportation businesses (around 15%).
- The highest volume of SBA small business loans is received by full-service restaurants. The total in 2019 was 28,680.
- Number 2 spot goes to limited-service restaurants; 19,141 loans were distributed. Not all industries are eligible for SBA small business loans, examples include Gambling, Lending Loan Packaging Firms,
- Government-Owned, Nonprofit, Multi-Sales Distribution, MLM, Religious, Real Estate Investment firms, and Speculation-Based industries.
Small Business Loan Demographic Statistics
- A rural small business is much more likely to receive a loan, (51% of all requested finances)
- 38% of urban small businesses receive the full amount of funding they requested.
- 62% of small businesses in rural areas rely on small banks for funding.
- 53% of small businesses in urban areas apply to larger banks for loans and 43% apply to smaller banks.
- Black-owned businesses are able to access under 2% of small business loans, even though 13% of the population are Black Americans.
- Black-owned firms are twice as likely to experience loan rejections.
- Under 47% of black-owned company financing applications are approved.
- Only 16% of small business loans are received by women-owned small businesses, even though 30% of small businesses are owned by women.
Small Business Loan Application Statistics
- Almost half of the small businesses applied for funding in the form of a loan from a small business lender, in the last twelve months.
- Institutional lenders, such as insurance companies and pension funds, have the highest lending approval rates for small businesses, (66%).
- 85% of small businesses that apply for merchant cash advances will get approval.
- The approval rate for lines of credit or SBA loans is 52%.
- After applying for a loan, 9% of small businesses received zero capital.
- The odds of a small business receiving all the funding they apply for is 20%.
- 14% of small businesses only receive a portion of the financing they applied for.
Small Business Lending Trends
- In 2020, 14 million loans, totaling $764 billion, were distributed to small businesses by the SBA.
- Fintech lenders are using other means of assessing a borrower’s creditworthiness including machine learning.
- AI and data analytics are being used to assess creditworthiness and speed up the application process, sometimes less than a couple of minutes.
- 88% of consumers in the US are now using fintech.
What is the success rate of an SBA loan?
General small business loans have a success rate of 57%, whereas SBA loans have an approval rate of 52%. However, there are factors that can affect these numbers, such as the location of the applicant, race, gender, and the type of bank used.
How many SBA lenders are there in the US?
In January 2021, across 49 states there were 144 active microloan intermediaries. If you want to know the intermediary in a particular state, you can use the microloan list of the lenders search tool on the SBA website.
How much debt does the average small business have?
According to US Today, the average small business owner has approximately $195,000 of debt.
What industry is the most common financier of SBA loans?
The top five highest-volume industries, defined as the number of applications submitted and approved are as follows:
- Full-service restaurants 28,680
- Limited-service restaurants 19,141
- Dentists 10,699
- General trucking and freight 8,959
- Hotels 8,618
Small businesses across the United States are choosing SBA loans for funding. Once they’ve received it, it’s put to good use for growing their business.
Now you know a little bit more about it, you’re in a good position to apply yourself. The chances of you securing some or all of your funding are in your favor, so go ahead and give it your best shot.