Small Business Loan Statistics 2019 – How Your Industry Affects Your Loan Chances

The industry you are active in will have an effect on your chances of getting approved for a loan. Restaurants, shops and other standard retail outlets and have around a 20% chance of attaining an SBA(7)(a) loan. In contrast, breweries, gas and oil support services, and commercial equipment leasing have a large approval rating. This is as a result of the fact that they are niche industries with a very low default rate.

However, the 20% statistic is only applicable when seeking a typical bank loan or an SBA (7) (a) loan. When an alternative online lender is used, the loan process is completely streamlined. OnDeck, for example, requires a credit score above 500, a year in business, and $100,000 in gross annual revenue.

Once these criteria have been satisfied a loan is then very likely. However, there are still a select number of industries that OnDeck will not serve. These are Adult Entertainment, Drug Dispensaries, Firearms Vendors, Government & Non-Profits, Public Administration, Horoscope and Fortune Telling, Lotteries, Casinos, Money Services Business (MSB), Religious, Civic Organizations, Rooming & Boarding Houses. Many other online loan operators will have similar restrictions, simply because these industries are more likely to default on their small business loan obligations than their more stable counterparts.

As per a research paper on small business lending by the Harvard Business School, One item that is common across all industries is that small business enterprises which do not get access to finance via loans have a higher failure rate.

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Latest SBA Statistics – What Else Affects Loan Chances Aside From Industry?

According to the latest SBA release (current as of 14 of December 2018), women account for only 28% of all SBA (7)(a) loan approvals, compared to males at 72%. 45% of approved loans are in the region on $350,000 to $2,000,000, 37% towards those that are over $2,000,000, 11% towards those between $150,000 to $300,000, and just 7% towards those that are under $150,000. 48% of total loan approvals go to businesses that are more than 2 years old, 12% toward those that are less than 2 years, 17% to startup companies, and 23% to businesses undergoing a change of ownership.

These data points demonstrate that larger and older loan applications are more likely to have success in their application, likely due to improved circumstances such as revenue and credit history. Moreover, they are not limited to just the SBA (7)(a) offering. The SBA 504, another loan offering, shows almost identical percentages. The SBA 504 is designed to facilitate the purchase of fixed assets, typically real estate, building, and machinery, at below market rates.

When it comes to ethnical breakdown, whites account for 49% of all loans, with 23% Asian, 17% undetermined, 7% Hispanic, 3% black, and 1% American Indian.  Like women, minorities are more likely to start a business without financing from a bank. As can be seen from the SBA office of advocacy report on small business financing options by ethnicity, 8.1% of non-minorities are likely to get a small business bank loan compared to Asian (7.0%), African American (3.2%) and Hispanic (3.6%).

However, it should be borne in mind that this is due to the fact that there are greater numbers of white male businesses that are applying for loans and in a position to succeed. It does not necessarily imply any kind of bias in the loan system itself, which have a rigorous and mathematical process of determining the success of each individual application.