Small Banks More Likely to Approve Small Business Loans
SCORE, the nation’s largest network of volunteer, expert business mentors, has gathered statistics that highlight the financial difficulties and opportunities American small businesses face today. Small business owners report that cash flow and costs are their top two challenges, and research shows that they have a harder time getting bank loans than larger businesses. Small, local banks are more likely than large banks to approve loans for small businesses.
Small business owners report these top challenges:
- 22% say cash flow is their biggest challenge
- 19% say it’s the costs of running their business
- 13% say revenues/sales
- 9% say credit availability
On average, small business daily income is only $7 above daily expenses. Average daily incomes include:
- Personal services: $3 net income
- Retail: $4 net income
- Repair and maintenance: $6 net income
- Professional services: $7 net income
- Restaurants: $11 net income
- Health care services: $21 net income
Small businesses struggle to obtain bank loans in comparison to larger companies:
- 38% of businesses with revenue less than $5 million are approved for bank loans.
- 70% of businesses with revenue between $5 and $100 million are approved for bank loans.
Common reasons for loan rejections include:
- 25%: Quality of earnings and cash flow
- 21%: Size of company
- 19%: Insufficient operating history
- 18%: Insufficient credit
Small banks are more likely than large banks to approve smaller companies:
- 60% of businesses with revenue less than $100K are approved for loans from small banks, while only 33% of these businesses are approved by larger banks.
- 69% of businesses with revenue between $100K and $1M are approved for loans from small banks, while only 49% of these businesses are approved by larger banks.
- 88% of businesses with revenue between $1M and $10M are approved for loans from small banks, while only 72% of these businesses are approved by larger banks.
Download this infographic for more data on small business capital and cash flow. Connect with a SCORE mentor today for personalized help with developing financial goals for your small business, and building a plan to achieve them.
About SCORE
Since 1964, SCORE has helped more than 10 million aspiring entrepreneurs. Each year, SCORE’s 10,000+ volunteer business experts provide 350,000+ free small business mentoring sessions, workshops and educational services to clients in 300+ chapters nationwide. In 2016, SCORE volunteers provided 2.2+ million hours to help create more than 45,000 jobs and 55,000 small businesses.
For more information about starting or operating a small business, call 1-800-634-0245 for the SCORE chapter nearest you. Visit SCORE at www.score.org. Follow SCOREMentors on Facebook and Twitter.
