Over the past year, the Small Business Administration (SBA) has been a lifeline for businesses struggling to survive during Covid or just entering the market.
But an SBA loan is never a slam dunk. In fact, only 45% of the 34.7 million American adults who applied for an SBA loan in the past year were approved. This is according to data provided by finder.coma financial information site.
Other interesting statistics on SBA loans from the past year:
- — 6% of men said they had applied for an SBA loan in the past year, compared to 8.16% of women (23.8 million men compared to 10.9 million women).
- — Although more men than women applied for SBA loans, women had a higher approval rate than men (51.9% approval for women versus 41.9% approval for men). men).
- — Millennials were the generation most likely to apply for an SBA loan, with 20.5% saying they had applied in the past year. They were followed by 17.6% of Gen X and 15.4% of Gen Z adults. Only 5.1% of baby boomers said they had applied for an SBA loan in the past year.
- – Although baby boomers were the least likely to apply for an SBA loan, baby boomers who did had the highest approval rate according to the results. Baby boomers had a 77.8% approval rating, compared to just 40.8% of millennials.
- – Bad credit was the most common reason people were denied an SBA loan, with 51.4% of rejected applicants listing it as the reason for denial. The second most common reason for refusal was having a criminal record at 31.2% and not having enough business time at 31.2%.
There are also a number of conditions that make a business ineligible for SBA loans. These include a company that:
— Gets more than 50% of its money from loans or investments
— A passive business owned by owners or promoters that does not provide additional services
— A life insurance company
— Located overseas or held by undocumented immigrants
— Involved in a multi-level selling scheme, also known as a pyramid scheme
— Engages in illegal activities, including cannabis
— Gets more than a third of its revenue from gaming
– Restricts who can use its services, such as women-only gyms
— A government-owned entity, other than a small business owned by a Native American tribe
— Promotes religion
– A cooperative
— Generates more than a third of its gross annual income through the origination of SBA loans
— The owner has a bad temper due to his criminal background
— The owner was delinquent on a federal loan, including student loans
— Involved in adult entertainment
— Makes most of its money from political activities or lobbying
- — Involved in speculation, such as oil, stocks, bonds, or gold and silver mining
There are, however, a few exceptions. For example, pawnbrokers who derive more than 50% of their income from common merchandise are eligible, as are life insurance agents.
This FAnna Serio Certified Commercial Loan Officer Home Page is a good resource if you are considering applying for an SBA loan.
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