Business loans have increasingly become more difficult to obtain for small business owners. In fact, about half of all new establishments survive five years or more and about one-third survives 10 years or more. With strict lending requirements and the extended application process of traditional banks, small-to-medium sized businesses (SMB) are turning to alternative lending like SnapCap for their business loans.
Snapcap is serving an underserved market of highly-qualified borrowers and making it more efficient than ever to apply for, and obtain, a business loan. A Snapshot of Alternative Lending shows data from a sample size of 14,000 applications submitted to SnapCap from January – June 2015.
Alternative loans are perfect for any business owner in any industry. The majority of our applicants are Gen X and Y, but we do see applicants from all age groups.
Although we’re getting apps from all age groups, we aren’t receiving apps from every state…not yet at least! Right now applications are coming from California, Texas, Florida, New York, Georgia, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia. It’s no surprise either, considering nine of these states were listed in the top 10 list of states with the highest number of small businesses (2012).
Type of Business
The types of businesses we fund are just as diverse as the age of our applicants. We’re able to fund business loans to those with a year or more in business, with little to no emphasis on credit, and no collateral requirements. The most common age of businesses we fund are those that have been operating for at least five years (29.98%). It’s an interesting stat because many of these businesses would likely have no problem securing a business loan from a traditional financial institution or through the SBA, yet they are still turning to online lenders.
Here is the breakdown of funded businesses by age.
We even fund online-only businesses, something traditional lenders don’t want to touch. In fact, almost 50% of the business loans we provide go to home-based businesses. Running an online or home-based business just makes business sense as it allows for a very low overhead. Our top funded industries include:
Another interesting fact about our business loans is that 22.64% of our loans go to businesses with annual revenue below $50,000. Inversely, 12.77% of our loans go to businesses with annual revenue over $500,000, but our smallest percentage of funded loans goes to businesses with annual revenue of $250,001-$500,000.
Why Entrepreneurs are Borrowing
We extend business loans for four main purposes; to purchase equipment, inventory (very popular with seasonal businesses), expansion (like new hires), and for general working capital. The most popular loan type we’re funding is for general working capital. Check out our past case studies for successfully funded businesses.
The average loan size is $68,000 with an average loan term of 11 months. However, business owners have flexible repayment terms, and can accept a loan term as short as 3 months, or as long as 24 months. Perhaps our greatest accomplishment is that 40% of our eligible borrowers take out another business loan with us! So if you’re a business owner that’s hesitant about an alternative loan or using an online bank, give us a shot; our numbers speak for their self!
Get a visual snapshot of our loans by visiting our Alternative Lending Infographic.