September 9, 2019
By Mary Miller
Contributing Editor, Main Street Monday
Main Street Monday – 48% of Main Street Have Their Financing Needs Met
Statistics and trends in the Federal Reserve’s Small Business Credit Survey give entrepreneurs, small business owners and lenders insight into this year’s overall picture of the small business lending industry.
- 29% of small businesses fail due to running out of capital
Whether needing capital to fund a start-up or to cover a financial gap, running out of capital is the second most popular reason for a small business failure.
- 42% of small business failure is due to lack of market need
The number one reason for small business failure is due to a lack of market need for the company’s products/services.
- 43% of small businesses applied for a loan last year
The survey found that nearly half of small businesses applied for a loan from a small business lender.
- 48% of small businesses have financing needs met
Overall, less than half of small businesses receive all the financing required to meet their needs. This percentage includes 20% of small businesses that qualified for and received all the financing they needed after applying for a small business loan, and 28% of small businesses that didn’t need to apply for a loan because they had enough capital.
- 52% of small businesses did not have their financing needs met
Reasons cited include:
Applied but did not receive financing
Applied but only received a portion of loan amount requested
Did not apply due to high debt, low credit score
Did not apply due to discouragement
- 9% of small businesses did not receive capital after applying for a loan
- 14% of small businesses received only a portion of the requested loan amount
- 57% of small businesses apply for $100,000 or less
Additionally, 20% apply for less than $25,000 and 8% apply for $1 million+
- Average SBA loan amount is $107,000
Since loans backed by the SBA are less risky for participating lenders, receiving funding from these loans, usually for smaller amounts, are met with greater success.
- 56% of small businesses apply for loans for business expansion, fund new opportunities or to purchase business assets