Lending Institutions and Small Business Loans

Lending Institutions and Small Business Loans

The U.S. Small Business Administration reported that there are 28.8 million small businesses located throughout this country. Recent figures indicate that these businesses employ a total of 56.8 million individuals. It’s important to indicate that small businesses are those which have less than 500 employees. Furthermore, 99.7% of the business conducted within the U.S. is due to the existence of these businesses.

Small Businesses and Longevity

The number of small businesses in operation does fluctuate. Approximately two-thirds will remain in operation for two years. Half of the total number of businesses will survive for five years, while one-third will continue to be in business for ten years.

Cash-flow problems account for most failed businesses. According to recent data, this is the case with 82% of the businesses that fail.

A Brief Overview of Small Business Loans

There are a variety of reasons why a small business might apply for a loan. In some instances, it may be to cover operating costs, purchase equipment, or expand operations. A company that seeks to rebrand itself may also seek a small business loan.

While some small businesses are able to obtain loans, others may not qualify. The amount of these loans will also tend to vary and depend on various factors. The average Small Business Association 7(a) loan during 2015, for example, was $371,628.00.

In 2016, businesses had loans approved from a variety of sources.The following institutions approved loans at these percentages:

  • Big banks: 23%
  • Institutional lenders: 62.8%
  • Small banks: 48.7%
  • Alternative lenders: 60.7%
  • Credit unions: 42%

It’s important to note that the category of institutional lenders includes entities such as savings banks and life insurance companies.

Learn More About Obtaining a Small Business Loan

If you have a small business and are interested in applying for a loan, it’s important to consider your options. Since there are different types of loans, each with their own set of repayment terms and percentage rates, you will want to discuss these options with a representative in detail. There are a variety of resources available to assist you with determining your repayment amount and frequency, such as a loan calculator. In addition to using a loan calculator, it’s essential to discuss these matters with your lending institution.