Last year, the Small Business Administration (SBA) was a lifeline for businesses struggling to survive Covid or just starting out in the marketplace.
But an SBA loan is never worthless. In fact, only 45% of the 34.7 million American adults who applied for an SBA loan last year were approved. This is according to the data provided by finder.com, website with financial information.
Other interesting statistics on SBA loans over the past year:
- – 6% of men said they applied for an SBA loan last year, compared with 8.16% of women (23.8 million men versus 10.9 million women).
- – Although more men than women applied for SBA loans, women had a higher percentage of approval than men (51.9% approval for women versus 41.9% approval for men).
- Millennials were the generation most likely to apply for an SBA loan, with 20.5% of millennials saying they applied last year. They are followed by 17.6% of Gen X and 15.4% of Gen Z adults. Only 5.1% of baby boomers said they applied for an SBA loan last year.
- “Although the Baby Boomers were the least likely to apply for an SBA loan, the data obtained showed that those who applied had the highest approval rates. The approval rate for baby boomers was 77.8%, compared with 40.8% among millennials.
- – Poor credit history was the most common reason for the denial of an SBA loan, with 51.4% of the rejected applicants citing this as the reason for the denial. The next most frequent reason for refusal was the presence of a criminal record (31.2%) and lack of sufficient time to work (31.2%).
There are also a number of conditions under which a business is not eligible for SBA loans. These include companies that:
– Earns more than 50% of his money from lending or investments
– Passive business owned by landlords or developers that does not provide additional services
– Life insurance company
– Are abroad or owned by undocumented immigrants
– Participates in a tiered sales plan, also known as a pyramid scheme.
– Engaged in illegal activities, including cannabis.
– receives more than a third of their income from gambling.
– Limits the circle of people who can use its services, for example gyms for women only.
– Government organization other than Indian tribal small business.
– Promotes religion
– Receives over one third of its gross annual income from the SBA loan package
– The owner has a bad temper due to his criminal background
– The owner did not repay the federal loan, including student loans.
– Participates in adult entertainment
– Most of the money comes from political activities or lobbying.
- – Engages in speculation, such as trading in oil, stocks, bonds, or mines gold and silver.
However, there are some exceptions. For example, pawnshops that receive more than 50% of their income from regular goods are eligible, as are life insurance agents.
This Finside page of the certified loan officer Anna Serio is a good resource if you are planning to apply for an SBA loan.