The number of small business applications surged in 2021, and with that, so did applications for small business loans, according to a new report from Business.org.
Small business loan applications jumped 24 in 2021 and the average approved loan amount rose to $727,343, a 27% increase from the year before, according to Business.org’s State of Small Business Funding report. This report uses data from the Small Business Administration (SBA) and lender activity reports from the Small Business Association.
The SBA approved an average of more than 60,000 loans per year. While the peak year for loan approval was in 2007 with 110,276 loans, the average SBA loan value at the time was just $186,859. The last five years have seen the most funding from the SBA, according to the report.
If you are starting a new business and are looking for funding, but don’t have collateral or the right credit for small business financing options, you could consider what types of personal loans could help you. Visit Credible to find your personalized interest rate and financing options without affecting your credit score.
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Some states see average funding amount soar past $1 million
The average loan amount varied significantly by state, ranging from $330,000 in Hawaii to more than $1 million in California and Georgia, according to the report. Another four states — South Carolina, Texas, North Carolina and Tennessee — averaged more than $900,000 per loan.
On the smaller funding amount side, three other states held average loan amounts that fell below $400,000: New Hampshire, Vermont and Ohio.
“Living in a state with higher funding may mean easier access to funds,” the study stated. “On the other hand, living in a state with less funding may mean there’s less competition in your area. Plus, with a shift toward eCommerce, you can start your business almost anywhere.”
If you are looking at your personal loan options, comparing lenders could help you save significantly on your monthly payments and over the life of the loan. Visit Credible to compare multiple personal loan lenders at once and choose the one with the best interest rate and loan terms for you.
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Accommodation and food services take majority of small business funding
Accommodation and food services took the highest share of small business loan funding compared to other industries, with 16% of the market share, according to the report. Retail trade followed closely behind at 15.5%. The median loan approval amount for these industries was $488,000 and $429,000, respectively.
However, some industries such as utilities and public administration were approved for millions of dollars in funding, yet made up less than 1% of the total funding share.
Some industries have a low barrier to entry, due to needing fewer purchases to begin. This means these small business owners can take out smaller loan amounts to get started. For example, loans with a minimum of $3,000 were approved for industries such as food services, construction, IT and arts and entertainment.
If you are looking to start up a business with a small loan, you could consider taking out a personal loan. Contact Credible to speak to a loan expert to see your line of credit options and get all of your questions answered.
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