The number of small business applications jumped in 2021, and with that, applications for small business loans also increased, according to a new report from Business.org.
Small business loan applications jumped 24 in 2021 and the average amount of loans approved rose to $727,343, a 27% increase over the previous year, according to the State of Financing report small businesses from Business.org. This report uses data from the Small Business Administration (SBA) and the Small Business Association’s lender activity reports.
The SBA has approved an average of more than 60,000 loans per year. While the peak year for loan approvals was 2007 with 110,276 loans, the average SBA loan value at the time was just $186,859. The past five years have seen the most funding from the SBA, according to the report.
If you’re starting a new business and looking for financing, but don’t have collateral or the proper credit for small business financing options, you might want to consider what types of personal loans might help. 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 Exceed $1 Million
The average loan size varied widely by state, ranging from $330,000 in Hawaii to more than $1 million in California and Georgia, according to the report. Four other states — South Carolina, Texas, North Carolina and Tennessee — average more than $900,000 per loan.
On the side of lower loan amounts, three other states had average loan amounts below $400,000: New Hampshire, Vermont and Ohio.
“Living in a state with higher funding may mean easier access to funds,” the study says. “On the other hand, living in a state with less funding can mean there’s less competition in your area. Plus, with a move towards e-commerce, you can start your business almost anywhere. .”
If you’re looking at your personal loan options, comparing lenders could help you save significantly on your monthly payments and loan term. Visit Credible to compare multiple personal 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 up majority of small business financing
Accommodation and food services accounted for the highest share of small business loan financing compared to other industries, with 16% of the market share, according to the report. Retail trade followed closely at 15.5%. The median amount of loan approvals for these industries was $488,000 and $429,000, respectively.
However, some industries such as utilities and public administration received millions of dollars in funding but accounted for less than 1% of the total funding share.
Some industries have a low barrier to entry because they require fewer purchases to get started. This means that these small business owners can take out smaller loans to get started. For example, loans of a minimum of $3,000 have been approved for industries such as food service, construction, IT, and arts and entertainment.
If you are looking to start a business with a small loan, you might consider taking out a personal loan. Contact Credible to speak with a loan expert to see your line of credit options and get all your questions answered.
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