January 6, 2020
C-Suite Wednesday — 29% of Businesses Fail Due to Lack of Capital
“Small business lending statistics offer valuable insight into the state of small business as a whole,” says Fundera analyst, Maddie Shepherd. “Generally speaking, the habits and trends that small business lending statistics indicate help paint a broader picture of how small businesses and small business lenders alike are approaching their finances.”
Here are the top 10 most eye-opening statistics on small business lending identified in Fundera 2020 year-end review:
- According to the Federal Reserve’s Small Business Credit Survey, 43% of small businesses submitted a loan application to a small business lender in 2020.
- Only 48% of small businesses overall have their financing needs met.
- 9% of small businesses who applied for a loan in 2020 received no capital at all.
- 14% of small businesses went through the process of applying for a small business loan and received a portion of the financing they needed.
- The average conventional loan to a small business was $633,000 in 2020 while the average SBA loan was just $107,000.
- Last year, 32% of small businesses that applied for funding did so with an online lender (up from 19% in 2017).
- 70% of small business employers have some form of unpaid debt. However, most small businesses with outstanding debt have a balance of less than $100,000. 17% of small businesses have $1 to $25,000 in debt, and 21% have $25,000 to $100,000 in debt.
- The most common reason for small businesses being denied at least some financing is their credit score (36%). Other common reasons include too much debt (35%), and insufficient credit history (33%).
- Most (56%) of small businesses apply for funding to expand their business, pursue a new opportunity, or acquire assets.
- The most common reason why a small business fails is that there is no longer a market need for that business’s products or services (42%). Other common reasons for failure include running out of capital (29%), team members and staffing (23%), competition (19%), pricing and cost issues (18%), undesirable products (17%).
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