January 21, 2015
By Bob Coleman
Editor, Main Street Wednesday
I love stats!
Christmas arrived a little late this year with the release of the Joint Small Business Credit Survey Report by four Fed banks.
Yesterday, was about SBA lending stats. Today is about the rest of the report.
The biggest takeaway for me was to learn almost 20 percent of applicants sought credit from an online lender in the first half of 2014. And, with the recent IPOs for OnDeck Capital and The Lending Club, more online money will be pouring into Main Street.
The rest of the stats…
While 22 percent of firms overall reported applying for credit in the first half of 2014, results show considerably weaker demand among firms with less than $1 million in annual revenues.
Only 18 percent of microbusinesses (under $250 thousand in annual revenues) applied for credit. By contrast, over 30 percent of small ($250 thousand–$1 million) and mid-size firms ($1–$10 million) and 58 percent of commercial firms (>$10 million) applied for credit.
Firms report spending an average of 24 hours applying for credit.
The most sought after product was a line of credit, followed by loans and credit cards.
There is strong demand for small loans.
Firms are borrowing for expansion. More than half of applicants sought $100 thousand or less in credit.
Nearly 40 percent of those seeking credit said the primary purpose was to expand their business—expansion was a top reason for borrowing across all revenue segments.
A majority of small firms (under $1 million in annual revenues) and startups (under 5 years in business) were unable to secure any credit.