{"id":6043,"date":"2019-07-17T18:00:35","date_gmt":"2019-07-17T18:00:35","guid":{"rendered":"https:\/\/www.loanry.com\/blog\/?p=6043"},"modified":"2023-01-28T23:48:12","modified_gmt":"2023-01-28T23:48:12","slug":"small-business-loan-statistical-overview","status":"publish","type":"post","link":"https:\/\/www.loanry.com\/blog\/small-business-loan-statistical-overview\/","title":{"rendered":"Small Business Loan Statistical Overview: By the Numbers"},"content":{"rendered":"<p>[vc_row][vc_column css=&#8221;.vc_custom_1656344945985{margin-top: 1em !important;}&#8221;][vc_video link=&#8221;https:\/\/www.youtube.com\/watch?v=cDTCnIA7Wj0&#8243;][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656344955641{margin-bottom: -1.2em !important;}&#8221;][vc_column_text]According to the U.S. Small Business Administration (SBA), <a href=\"https:\/\/www.sba.gov\/federal-contracting\/contracting-guide\/size-standards\">a small business<\/a> is a business with fewer than 500 employees. Well, sort of. Most of the time. Maybe, under certain circumstances.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656345294349{margin-top: -0.7em !important;margin-bottom: -1.2em !important;}&#8221;][vc_column_text]<\/p>\n<h2>Small Business Loan Statistics &amp; Definitions<\/h2>\n<p><span style=\"font-weight: 400;\">As it turns out, what counts as a \u201cSmall Business\u201d often depends on the type of business being discussed and not always what\u2019s in your <a href=\"https:\/\/www.loanry.com\/business-loans\/accounts-receivable-financing\">accounts receivable<\/a> (AR) or payable (AP). Sometimes the number of employees involved goes well beyond 500; in other cases it\u2019s as low as 250. In some industries, the number of employees isn\u2019t the issue so much as the dollar value of the business in terms of annual income OR annual employment costs (again \u2013 sort of, mostly, in general).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The<\/span><a href=\"https:\/\/www.sba.gov\/document\/support-table-size-standards\"> <span style=\"font-weight: 400;\">SBA document<\/span><\/a><span style=\"font-weight: 400;\"> breaking this all down is 49 pages long. I kid you not. Then again, considering that the SBA, however useful, is still a function of the U.S. Government, I suppose we should be thankful it\u2019s not 4,900 pages.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_html]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[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>Dollar-based Industries<\/h3>\n<p><span style=\"font-weight: 400;\">If your business is Men\u2019s Clothing, you can make or hire up to <strong>$11 million annually<\/strong> and still be \u201csmall.\u201d For Women\u2019s Clothing, however, that range goes up to <strong>$27.5 million<\/strong>. Children and Infants\u2019 Clothing, $32.5 million, which you should not confuse with a Family Clothing Store, which is still small up to <strong>$38.5 million.<\/strong> \u201cOther Clothing Stores\u201d cap out at $20.5 million, unless they\u2019re a Shoe Store, which is still a small business until it consistently passes<strong> $27.5 million.<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>The point is, it\u2019s different depending on what you do<\/strong>. This matters when we get to specific business loan statistics. The needs of large \u201csmall businesses\u201d aren\u2019t the same as those of smaller versions, just like the needs of one industry aren\u2019t always the same as those of others. <\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h4>Wait, but Small Means Small<\/h4>\n<p>Still, if you\u2019re like me, none of these are what you first think of when you\u2019re talking about \u201csmall business.\u201d And you\u2019re not wrong.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_html]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[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656348075105{margin-bottom: -1.2em !important;}&#8221;][vc_column_text]<span style=\"font-weight: 400;\">This matters because when we\u2019re talking about \u201csmall business loans\u201d or \u201csmall business loan statistics,\u201d we mean all of them &#8211; those with no employees, those with two or three, and those with hundreds. Together, these small businesses have created nearly twice as many net new jobs as large businesses since 2000, even though small businesses tended to be hit harder by the pandemic than major corporations.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Small businesses are a <\/span><i><span style=\"font-weight: 400;\">big <\/span><\/i><span style=\"font-weight: 400;\">deal. <\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>Who\u2019s Starting These Small Businesses?<\/h3>\n<p><span style=\"font-weight: 400;\">Entrepreneurship is about three things: the \u201cgood idea,\u201d the perseverance to make it work, and the willingness to take risks with absolutely no guarantee of reward. The first two aren\u2019t easy by any stretch, but it\u2019s that last one that bewilders those who aren\u2019t entrepreneurs. They simply can\u2019t imagine why you\u2019d do what you do or give up what you give up, knowing full well that even if you do everything right, it might not work.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, for entrepreneurs the answer is simple: because it <\/span><i><span style=\"font-weight: 400;\">might<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are some<strong> highlights from the extensive statistics compiled by the U.S. Small Business Administration regarding who makes up the thirty million plus small business owners in the U.S. at the moment.<\/strong> Note that most of these statistics are pre-pandemic or include only the early months of the pandemic. Data from 2020-2021 is still in flux. <\/span><\/p>\n<ul class=\"custom-list\">\n<li>Just over a THIRD (36.3%) are women.<\/li>\n<li>Almost a THIRD are (29.3%) minority-owned. About 12.2% are Hispanic-owned and another 9.5% are African American.<\/li>\n<li>A little under a ONE in TEN (9.3%) are veterans.<\/li>\n<li>Nearly 15% are started and owned by immigrants.<\/li>\n<li>Only about 4% are under the age of 30. Another 14% are 30 \u2013 39.<\/li>\n<li>Things really start cooking at 40, it seems. Roughly 25%, or ONE QUARTER small business owners are between 40 \u2013 49, and 35%, over a THIRD, are 50 \u2013 59.<\/li>\n<li>Not that their elders are slacking. The remaining 22%, still more than ONE in FIVE are over the age of 60.<\/li>\n<li>Almost exactly a THIRD have a High School Diploma or GED as their highest academic achievements, at least in terms of traditional education.<\/li>\n<li>Nearly HALF have an Associate\u2019s or Bachelor\u2019s Degree, leaving about One in FIVE with a Masters or Doctorate.<\/li>\n<\/ul>\n<p>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656348266102{margin-top: -0.7em !important;margin-bottom: -1.2em !important;}&#8221;][vc_column_text]<\/p>\n<h2><b>How Are Small Businesses Structured?<\/b><\/h2>\n<h3>Sole Proprietorship<\/h3>\n<p><span style=\"font-weight: 400;\">This is by far <strong>the most common structure for a beginning business<\/strong>. Nearly three-quarters (73%) of all businesses (of any size) in the U.S. are sole proprietorships. That percentage is even higher (86%) for businesses with no employees. A much smaller percentage (14%) of businesses with employees are organized as sole proprietorships.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The sole proprietorship is one of the easiest types of business to establish in terms of paperwork and tax obligations. Essentially, if you start doing any sort of work for which you receive payment or hope to receive payment, but you\u2019re not technically an employee of someone else, then you\u2019re a sole proprietor. Local entertainers, business consultants, or freelance writers are common examples of sole proprietorship.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It might not always be obvious from the name. Sole Proprietors sometimes do business as themselves (\u201cBob Frankenfurter, Magician\u201d) or file for a DBA \u2013 \u201cdoing business as\u201d (\u201cMagic-In-A-Jiffy Entertainment\u201d). Either way, you are the business and the business is you. That makes the paperwork a little easier, although you\u2019ll need to file an additional page or two with your personal income taxes to include any business expenses or income.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">All business-related decision-making is entirely yours as well. Whether you work twenty hours a week or sixty, whether you re-invest every dollar or give yourself some flexibility through a business funding loan, it\u2019s all up to you. One hundred percent.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Finally, of course, any profits or benefits are 100% yours \u2013 as are losses and liabilities. You\u2019re taking all the risk, so you get all the rewards as well as any failures. That includes any consequences from employee behavior as well. While most businesses with no employees are sole proprietorships, many sole proprietorships have several employees. If one of them screws up and damage is done, a lawsuit is filed, or money is lost, the owner is responsible just as if he or she did it themselves.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_html]JTNDZGl2JTIwY2xhc3MlM0QlMjJpbmZvJTIyJTNFJTBBJTBBJTNDaSUyMGNsYXNzJTNEJTIyZmEtc29saWQlMjBmYS1zcXVhcmUtaW5mbyUyMGN1c3RvbS1pbmZvJTIyJTNFJTNDJTJGaSUzRSUwQSUzQ3AlMjBzdHlsZSUzRCUyMm1hcmdpbi1ib3R0b20lM0ElMjAwJTIyJTNFJTNDc3Ryb25nJTNFTmVhcmx5JTIwdGhyZWUtcXVhcnRlcnMlMjAlMjg3MyUyNSUyOSUyMG9mJTIwYWxsJTIwYnVzaW5lc3NlcyUyMCUyOG9mJTIwYW55JTIwc2l6ZSUyOSUyMGluJTIwdGhlJTIwVS5TLiUyMGFyZSUyMHNvbGUlMjBwcm9wcmlldG9yc2hpcHMuJTNDJTJGc3Ryb25nJTNFJTNDJTJGcCUzRSUwQSUwQSUwQSUzQyUyRmRpdiUzRQ==[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656351711973{margin-top: -0.7em !important;margin-bottom: -1.2em !important;}&#8221;][vc_column_text]<\/p>\n<h3>Partnership<\/h3>\n<p><span style=\"font-weight: 400;\">You think marriage requires communication and compatibility? Try going into business together. Only about 8% of businesses in the U.S. are partnerships.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the name suggests, a partnership is the combined ownership of two or more people. It is otherwise similar to a sole proprietorship, other than in how liability is distributed. Like sole proprietorships, partnerships are a \u201cpass-through\u201d business structure, meaning both profits and obligations (like taxes) \u201cpass through\u201d the company to the individuals in charge. Profits are taxed just like any other income.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a <strong>Limited Partnership (LP)<\/strong>, one partner carries unlimited liability for any negatives which may occur while the other partner\u2019s (or partners\u2019) liability is legally limited. As you might suspect, this changes the power structure as well. Partners with limited liability also have limited direct control, the details of which are spelled out in their collective partnership agreement.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The alternative is a <strong>Limited Liability Partnership (LLP<\/strong>), in which all partners have limited liability and \u2013 unless otherwise specified in their agreement \u2013 share equal control over the business. LLPs protect partners from debts or other liabilities of either the business itself OR the other partner(s). The advantages of such protection are obvious.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_html]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[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>Limited Liability Company (LLC)<\/h3>\n<p><span style=\"font-weight: 400;\">The Limited Liability Company structure <strong>allows business owners to retain the liability protection of a corporation while being taxed as a sole proprietor or partnership<\/strong>. Even if the business goes south, faces legal assaults, or otherwise ends up on the dark side of business loan statistics, the powers-that-be cannot come take your car, your house, or your personal financial resources to satisfy the debts of your business or any claims against it. It\u2019s a whole separate entity, at least legally.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">LLCs dissolve easily upon the death or other removal of any of the owners or partners, or after a set amount of time \u2013 usually thirty years. <strong>They are very popular for mid-sized and growing businesses.<\/strong> However, for the nice compromise they offer between operating as a sole proprietorship vs. a large corporation.<\/span><\/p>\n<p><strong>Just over a third (35%) of National Small Business Association (NSBA) members report their business as an LLC.\u00a0<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Now, some of you just did some quick math in your heads and started shouting at the screen (at least internally) that we\u2019ve now categorized something like 116% of all small businesses &#8211; and we haven\u2019t even covered C-Corps or S-Corps yet!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Take a breath\u2026 It&#8217;s not as bad as it sounds. LLCs are a tax structure for sole proprietorships or partnerships, not a whole separate thing &#8211; at least in terms of how the government likes to categorize things when it\u2019s compiling statistics. We may live in some pretty strange times, but we\u2019re still only going to have 100% of businesses categorized by the time we\u2019re finished!<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=&#8221;6046&#8243; img_size=&#8221;full&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>Corporations<\/h3>\n<p><span style=\"font-weight: 400;\">Corporations (sometimes called \u201cC-Corps\u201d) are, legally speaking, <strong>entirely separate from their owners<\/strong>. They profit as legal entities, pay taxes as legal entities, may sue or be sued as legal entities, and since 2010, they have many of the same Bill of Rights protections as individuals do \u2013 at least according to the U.S. Supreme Court.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The major advantage of a corporation is that &#8220;separateness.&#8221; While the business may suffer, <strong>the individual cannot be held personally responsible for the company\u2019s losses, actions, or other liabilities.<\/strong> On the flip side, there\u2019s all the paperwork associated with incorporation. Just hearing or reading the term \u201ccorporation\u201d conjures images of large rooms full of desks with people filing folders and filling out forms and delivering reports or requests up and down the hierarchy. What we see all the time in corporate environments from movies or TV shows may be a bit clich\u00e9d, but it\u2019s not entirely unfounded.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Corporations pay taxes on their profits (assuming they make them) and again when shareholders receive dividends. This is sometimes referred to as \u201cdouble taxation.\u201d Individual shareholders are required to report profit from stocks on their personal tax returns, which brings up another feature of corporations \u2013 they can sell stock to generate capital.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_html]JTNDZGl2JTIwY2xhc3MlM0QlMjJpbmZvJTIyJTNFJTBBJTBBJTNDaSUyMGNsYXNzJTNEJTIyZmEtc29saWQlMjBmYS1zcXVhcmUtaW5mbyUyMGN1c3RvbS1pbmZvJTIyJTNFJTNDJTJGaSUzRSUwQSUzQ3AlMjBzdHlsZSUzRCUyMm1hcmdpbi1ib3R0b20lM0ElMjAwJTIyJTNFQXBwcm94aW1hdGVseSUyMCUzQ3N0cm9uZyUzRW9uZS1xdWFydGVyJTIwJTI4MjUlMjUlMjklM0MlMkZzdHJvbmclM0UlMjBvZiUyMHNtYWxsJTIwYnVzaW5lc3NlcyUyMGluJTIwdGhlJTIwVS5TLiUyMHdpdGglMjBhdCUyMGxlYXN0JTIwb25lJTIwZW1wbG95ZWUlMjBhcmUlMjBDLUNvcnBzLiVDMiVBMCUzQyUyRnAlM0UlMEElMEElMEElM0MlMkZkaXYlM0U=[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>S Corps<\/h3>\n<p><span style=\"font-weight: 400;\">An S Corp is <strong>not an entirely distinct form of a business organization so much as a tax structure<\/strong>. The name comes, in fact, from Chapter 1, Subchapter S of the Internal Revenue Code, which addresses corporate taxation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Plus, it\u2019s catchy. \u201cS Corp\u201d kinda rolls off the tongue, doesn\u2019t it?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The central feature of an S Corp is that it allows your business to <strong>avoid that \u201cdouble taxation\u201d issue mentioned above for C Corps<\/strong>. The corporation does not pay corporate taxes; all profits (or losses) are passed along directly to shareholders, who include them on their personal tax returns. At the same time, ownership maintains limited liability as they would with an LLC or Corporation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In exchange for these benefits, <strong>S Corps have limits in terms of the number of investors the law allows and the types of stockholders they can have.<\/strong> S Corps may have no more than 100 shareholders and only one type of stock, and shareholders must be U.S. citizens or legal residents. (With corporations, investors can be virtually anyone, including other corporations or partnerships.)<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_html]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[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>Where Is The Money Coming From?<\/h3>\n<p><span style=\"font-weight: 400;\">The most recent NSBA survey found that about a third of small businesses who responded reported no need to borrow money or expend extra capital during the previous year (2017). Another third reported using revenue from the business to expand or do whatever else they needed to do, and similar numbers indicated the use of a business credit card in the mix. (Respondents could indicate more than one source of financing during the year.)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Roughly a third indicated a bank or credit union loan of some sort. 13% borrowed from friends or family, 12% received some sort of extended credit from vendors, and 3% managed to secure \u201cAngel Investors.\u201d There were miscellaneous variations if you\u2019d like to read the rest of it \u2013 it\u2019s quite interesting for a table of numbers.<\/span><\/p>\n<p><span style=\"color: #0000ff;\"><strong>By the Numbers:<\/strong><\/span><\/p>\n<blockquote><p>That\u2019s business <em>success<\/em>. <span style=\"font-weight: 400;\">When it comes to business failures, the numbers are much more consistent. <\/span><i><span style=\"font-weight: 400;\">82 percent of businesses that fail do so because of cash flow problems. <\/span><\/i><span style=\"font-weight: 400;\">That\u2019s a big deal, my friend. That offsets a whole lot of other business loan statistics.<\/span><\/p><\/blockquote>\n<p>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_js]JTNDc2NyaXB0JTIwaWQlM0QlMjJpbmZvZ3JhbV8wX18lMkZFOE1scEpjb0lzQ3QyZnhLTHpWUyUyMiUyMHRpdGxlJTNEJTIyQ3JlZGl0JTIwc291cmNlcyUyMG1vc3QlMjBzbWFsbCUyMGJ1c2luZXNzJTIwYXBwbHklMjB0byUyMGZvciUyMGNyZWRpdCUyMiUyMHNyYyUzRCUyMmh0dHBzJTNBJTJGJTJGZS5pbmZvZ3JhbS5jb20lMkZqcyUyRmRpc3QlMkZlbWJlZC5qcyUzRlNYViUyMiUyMHR5cGUlM0QlMjJ0ZXh0JTJGamF2YXNjcmlwdCUyMiUzRSUzQyUyRnNjcmlwdCUzRQ==[\/vc_raw_js][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656358365469{margin-bottom: -1.2em !important;}&#8221;][vc_column_text]<\/p>\n<h3>Why Do Entrepreneurs Take Out Business Loans?<\/h3>\n<p>We\u2019ve talked before about <a href=\"https:\/\/www.loanry.com\/blog\/business-loan-basics-spelled-out\/\">different sorts of business loans<\/a>\u00a0and what requirements various business financing lenders\u00a0are most likely to have. Both are worth revisiting if you\u2019re considering a small business loan. For now, we\u2019ll recap a few general things, then talk about where you go from here.<\/p>\n<p>Most small businesses take out loans for one of <strong>four general reasons<\/strong>:[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_tta_accordion style=&#8221;modern&#8221; color=&#8221;purple&#8221; gap=&#8221;2&#8243; active_section=&#8221;1&#8243; collapsible_all=&#8221;true&#8221;][vc_tta_section title=&#8221;One, They\u2019re Trying to Start a Business&#8221; tab_id=&#8221;1656358396785-99895d81-0b47&#8243;][vc_column_text]This one makes plenty of sense. If your business is brand new, you probably haven\u2019t made much money with it yet. Duh.<br \/>\nIf you use traditional lenders, you\u2019ll most likely need to either establish a long, solid personal credit history or be able to offer up sufficient collateral, as well as provide a fully documented business plan. <a href=\"https:\/\/www.loanry.com\/business-loans#!\/1\">Online business lenders<\/a> have specific requirements as well, but tend to be somewhat more flexible and eager to earn your business \u2013 although interest rates may reflect the increased risk they\u2019re willing to take on you.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Two, They\u2019re Trying to Expand Their Business&#8221; tab_id=&#8221;1656358396785-9c96b229-68b3&#8243;][vc_column_text]What a great problem to have. You need more space and more equipment. You need more people. Growth is great, but remember that it has to be the right growth at the right time in the right way. Work with the lender of your choice to discuss manageable debt \u2013 low enough that you\u2019re confident about timely repayment, but high enough to finance the meaningful growth you need.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Three, They Need More Inventory&#8221; tab_id=&#8221;1656358400528-f0208806-1c9b&#8221;][vc_column_text]Another good problem, although this one can reflect the seasonal nature of your business as much as actual sustained growth. Maybe your business includes a retail or rental element, or maybe your service requires a ready supply of parts or equipment. Either way, flexible financing can help you meet customer needs quickly and effectively, which in turn means you keep needing more.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Four, They\u2019re Looking to Strengthen their Financial Foundation&#8221; tab_id=&#8221;1656358402536-1e486a4a-f843&#8243;][vc_column_text]This can mean a range of things. From bill consolidation at the business level to ensuring the underlying structure of the business and your business plan are solid. It might also include, however, your long-term goal to have established credit down the road should you ever require substantial financing for growth, updates, or any other major need.<\/p>\n<p>If you\u2019ve started your own business, you\u2019re clearly not afraid of hard work. You\u2019re apparently not adverse to risk, either. It\u2019s possible, therefore, that in previous years you\u2019ve taken risks which haven\u2019t worked out, despite your best efforts. Or, maybe you haven\u2019t always been the person you are now, and your credit history reflects that. Sometimes we can do EVERYTHING right and life still hits us with unexpected expenses and challenges which impact our credit rating and our cash flow. That can make it tricky when it\u2019s time to figure out <a href=\"https:\/\/www.loanry.com\/business-loans\">how to finance a business<\/a>.[\/vc_column_text][\/vc_tta_section][\/vc_tta_accordion][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h3>Small Business Loans<\/h3>\n<p>Small business loans <em>now<\/em>, which you consistently and intentionally repay according to whatever agreement you\u2019ve worked out with your lender, <strong>can be useful for current practical needs while helping you build or rebuild your credit<\/strong> \u2013 individually or as a business \u2013 towards the future.<\/p>\n<p>I\u2019ve spoken with numerous entrepreneurs whose local banks or credit unions were entirely sympathetic, but simply unwilling to work with them on a small business loan without co-signers, collateral, or other impracticality in place to protect the institution\u2019s interest. That\u2019s fair. They\u2019re businesses, too, and businesses have to minimize risk in hopes of making a profit.<\/p>\n<p>It\u2019s because of circumstances like yours, however, that organizations like Loanry exist. It\u2019s the 21st century, and we have more options than ever before when it comes to the music we choose to listen to, the way we access movies, TV shows, or other forms of episodic programming, the cell phones we buy, the electronic devices we use, the social media platforms we prefer\u2026 we can even pick and choose from potential mates through and endless array of dating apps and services.<\/p>\n<p>If you wouldn\u2019t take the very first match that comes up on DearGodPleaseDateMe.com, why would you not look at all of your options\u00a0to learn which <a href=\"https:\/\/www.loanry.com\/blog\/are-small-business-loans-right-for-your-business\/\">small business loans might be right for you<\/a>? That would be unnecessarily careless and a tad irresponsible, don\u2019t you think?[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_raw_js]JTNDc2NyaXB0JTIwaWQlM0QlMjJpbmZvZ3JhbV8wX18lMkZMS2hJUG1GcmM5RzNaa2xGdEpkdSUyMiUyMHRpdGxlJTNEJTIyTW9zdCUyMHBvcHVsYXIlMjBzb3VyY2VzJTIwb2YlMjBjcmVkaXQlMjBmb3IlMjBzbWFsbCUyMGJ1c2luZXNzZXMlMjIlMjBzcmMlM0QlMjJodHRwcyUzQSUyRiUyRmUuaW5mb2dyYW0uY29tJTJGanMlMkZkaXN0JTJGZW1iZWQuanMlM0ZOU0YlMjIlMjB0eXBlJTNEJTIydGV4dCUyRmphdmFzY3JpcHQlMjIlM0UlM0MlMkZzY3JpcHQlM0U=[\/vc_raw_js][\/vc_column][\/vc_row][vc_row][vc_column css=&#8221;.vc_custom_1656415628358{margin-bottom: -1.2em !important;}&#8221;][vc_column_text]<\/p>\n<h4>All Types of Business Loans<\/h4>\n<p>I\u2019m not suggesting you simply Google <a href=\"https:\/\/www.loanry.com\/business-loans\/all-business-loans\">all business loans<\/a> and then take your chances with the top search result or highest-paid banner ad which appears. That would be even worse than not looking online at all, in my humble opinion. But, as it turns out, we can help in that department. (I know \u2013 what a coincidence!) See, <strong>we\u2019ll ask you for some basic information about yourself and what you\u2019re looking for, then connect you with verified lenders we think best match your needs<\/strong>.<\/p>\n<p>Then, you talk to them. They talk to you. See if you hit it off. See if the vibe feels right. Maybe some magic happens and you decide to borrow and they decide to lend and a long-term relationship develops. Or maybe it doesn\u2019t \u2013 no worries, there are plenty more out there. That\u2019s the great thing about the freedom such a variety of lenders give you. Instead of you going around, hat in hand, trying to persuade guys in suits or tense blondes in pencil skirts that you really do have a great business idea, you become the customer. Lenders compete for your business by trying to offer you the best terms they can manage. All we do is help you connect with the right people to get started.[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<a class=\"arb-banner\" href=\"https:\/\/key.goalry.com\/get-member-key?utm_campaign=organic&utm_source=loanry&utm_medium=businessloanscategory&utm_content=banner\"><img class=\"arb-banner-img\" src=\"https:\/\/www.loanry.com\/blog\/wp-content\/uploads\/2022\/02\/loanry-big-banner.jpg\" alt=\"Loanry\"><\/a>","protected":false},"excerpt":{"rendered":"<p>According to the U.S. Small Business Administration (SBA), a small business is a business with fewer than 500 employees. Well, sort of. Most of the time. Maybe, under certain circumstances.<\/p>\n","protected":false},"author":13,"featured_media":6186,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[249],"tags":[632,851,656,657],"acf":[],"_links":{"self":[{"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/posts\/6043"}],"collection":[{"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/comments?post=6043"}],"version-history":[{"count":41,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/posts\/6043\/revisions"}],"predecessor-version":[{"id":18085,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/posts\/6043\/revisions\/18085"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/media\/6186"}],"wp:attachment":[{"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/media?parent=6043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/categories?post=6043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.loanry.com\/blog\/wp-json\/wp\/v2\/tags?post=6043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}