Small business credit statistics

Starting or growing a small business? While you may or may not be looking for financing now, there’s a good chance you will need additional capital as your business grows. Here we share statistics related to small business credit and financing from a variety of sources.

Surprised by any of these findings? Did we miss important research? Feel free to share comments or additional sources in the comments below.

Overview of Small Business in America

In 2013, there were 28.8 million small businesses (500 or fewer employees). Eighty percent had no employees (nonemployer firms). Almost 80% (79.9) of firms started in 2014 survived until 2015, the highest share since 2005. About half of all businesses survive the first five years.

In 2015, 9.9 million firms were women-owned and another 2.5 million were owned equally by men and women. Additionally, 29.3% (8 million) were minority-owned. About 14.4% were immigrant-owned.

Source: U.S. Small Business Administration Office of Advocacy

Business Credit Knowledge

Many small business owners don’t realize their business has credit scores, or how to get information about them.

Of small business owners surveyed, 45% did not know they have a business credit score, 72% did not know where to find information on their business credit score and 82% didn’t know how to interpret their score.

Source: Nav American Dream Gap Survey, 2015

Seventy-two percent of small business owners surveyed did not know their business credit scores.

Source: Manta Survey, August 2016

Small Business Credit and Financing

Small business owners who understand their business credit scores are 41% more likely to be approved when they apply for a bank loan.

Source: Nav American Dream Gap Survey, 2015

39% of small business owners are credit “ghosts,” which means they have a personal credit score below 620 and one or zero revolving trade accounts.

Source: Nav October 2017 Survey of 189,466 Small Business Customers 

According to the National Small Business Association, 73% of small firms used financing in the last 12 months.

• 41% used a bank loan
• 31% used a credit card
• 16% used vendor credit
• 14% used a private lender
• 4% used leasing
• 4% used an SBA loan
• 1% used angel funding or venture capital

Additionally, the survey found a correlation between employment growth and ability to access financing.

Source: National Association of Small Business Owners 2015 Year End Economic Report

According to the SBA, the top sources of startup capital (2012) were:

• Personal savings (57%)
• Personal credit card (8%)
• Bank loan (8%)
• Other personal assets (6%)
• Home equity (3%)
• Business credit card (2%)

One-quarter of firms surveyed reported using no startup capital.

Source: SBA Office of Advocacy from U.S. Census Bureau survey 2012

Financing Frustrations

Finding and securing financing is an ongoing challenge for small business owners.

Thirty-two percent (of nonemployer firms surveyed) applied for financing in the previous 12 months. Overall, 59% were approved for some type of financing; the approval rate for smaller firms was just 52%.

Source: Federal Reserve 2015 Joint Small Business Credit Survey

Funding Challenges

Forty-one percent (of nonemployer firms) were not approved for the financing they sought. Low credit scores and lack of collateral were the two most common reasons cited. Seventy-one percent reported a financing shortfall.

Source: Federal Reserve 2015 Joint Small Business Credit Survey

Forty-four percent of all nonemployers rely primarily on the personal funds of the owner to run the business. Among smaller and newer firms, nearly two-thirds are reliant on the owner’s personal funds as a primary funding source for the business. Only 35% of nonemployers indicated they’re operating profitably. Their top two challenges in doing business are generating sales and managing cash flow.

Source: Federal Reserve 2015 Joint Small Business Credit Survey