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20 Small Business Statistics That Every CEO Should Know in 2022

Small companies have played a significant role in economic growth. It is because they generate much more employment than large enterprises. If you plan to ask for a loan, it will be easier for you if you have a lot of information already.

Miriam Elbaz
Miriam Elbaz
May 26, 2022

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Statistics Of Small Business

You are lucky if you operate a business or are considering establishing one.

The United States has 28.8 million small enterprises with 56.8 million employees. 

Small firms – defined as those with less than 500 employees – account for 99.7 percent of all enterprises in the United States. 

When looking at small company data on a state-by-state basis, it is clear that communities across the country rely on small companies for jobs, commodities, services as well as overall economic wellbeing. 

Reason For Small Business Failure?

According to a US Bank Survey, cash flow difficulties were recognized as a cause of the collapse of 82% of enterprises. 

Remember that cash flow is more than simply the quantity of money that comes in and out. You must also consider time.

You may run into cash flow difficulty if you run an invoicing based firm and your invoices aren't paid until after your loan payments are due.

Seasonal businesses might also face this issue as their money doesn't come in until the summer. Therefore, they have to make due in the other seasons. 

It's critical to budget and evaluate cash flow statements to ensure you're on top of things.

“The longer a firm has been in existence the more likely it is to survive. The initial few years are typically the most difficult”

Biggest Challenges Of Running A Small Business

According to the National Association of Small Businesses' 2015 report, the top three problems of running a business were economic uncertainty, the expense of health insurance coverage, and a reduction in client spending.

It ties with regulatory constraints virtually vying for third place. Still most business owners are upbeat as 75% feel confident in their own company up from a year ago.

The Future Of Small Business Statistics

Two thirds of enterprises survive the first two years. Half survive the first five years. And one-third survive the first ten years. 

The longer a firm has been in existence the more likely it is to survive. The initial few years are typically the most difficult. 

The Bureau of Labor Statistics has studied firm survival rates across industries and determined that these rates are very stable across industries.

How Many Jobs Are Created By Small Businesses?

Small enterprises create the bulk of employment in the United States. According to the Small Business Administration, small businesses produce 1.5 million employment every year, accounting for 64% of all new jobs created in the United States.

Small Business Financing Statistics

Obtaining sufficient money is a challenge for some. 27% of firms questioned by the NSBA stated that they could not obtain the business capital they required.

The most common major impact that lack of finance had on those one-in-four enterprises prevented them from developing their business. Particularly for women and minority-owned businesses.

It also occasionally prevented them from financing sales and pushed companies to lay off personnel.

“You don't have to own a property. And if you do, you don't have to use it as security to get financing”

How Much Startup Capital Do Most Small Businesses Need?

This question got wildly disparate responses in two polls. According to the Wells Fargo Small Business Index, the average amount of initial money required by a small business entrepreneur is $10,000. According to the Kauffman Firm Survey the value is more like $80,000.

Where Does That Financing Usually Come From?

According to the SBA business loans, business credit cards and lines of credit account for around three fourths of new company funding. 

Personal investment from the owner or the owner's family and friends on the other hand might play a substantial impact.

Real estate may be a useful asset for company owners since it can be used as collateral to receive certain small business loans.

Of course, you don't have to own a property. And if you do, you don't have to use it as security to get financing. Several unsecured loans do not demand any security.

Approval Rate For Small Business Loans?

The most common SBA loan is the 7(a) loan which is a terrific alternative for business owners with excellent credit. 

Their low-interest rates and extended payback terms are accompanied by a relatively low acceptance rate which necessitates great credit among other requirements.

According to SBA, data from 2015 approval rates differ by gender, ethnicity and location. 71% for male-owned businesses versus 29% for female-owned, 29% for all minority-owned businesses versus 57% for white-owned, 17% for rural companies versus 83% for urban and 67% for existing businesses versus 33% for new businesses.

What About Non-SBA loans?

In March 2016, big banks approved 23% of funding requests. Institutional lenders including savings banks and life insurance companies approved 62.8 percent. Small banks approved 48.7%. Alternative lenders approved 60.7 percent. And credit unions approved 42% of loan applications.

Small Business Credit Scores

Both personal and commercial credit scores are critical to the success of your company.

They'll be one of the most important elements in determining whether or not a lender approves your loan application. And if so, then at what interest rate and period.

Five elements are used for a FICO score which is the most well-known credit score:

Entrepreneurs And The Economy Statistics

Small companies have played a significant role in economic growth. It is because they generate much more employment than large enterprises. 

According to the SBA, small companies added 1.4 million new employment in the first three fiscal quarters of 2014. With very small enterprises accounting for 39% of the total with fewer than 50 people. 

Small businesses were critical to the country's recovery from the recession. Small enterprises produced 60% of new jobs between the middle of 2009 and the middle of 2013.

Final Thoughts

Small business statistics help businesses understand what to expect in the day-to-day operations of their company. It will be easier for you to ask for a loan if you have a lot of information already.

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