The State of Small-Business Loans Across America

The State of Small-Business Loans Across America

Key Takeaways

  • Alaska has seen the largest increase in monthly small-business applications (64.9%) from 2021 to today, while Georgia has seen the largest decrease (-16.2%).
  • So far in 2022, Wyoming has the most small businesses forming per 10k residents (199.7), and Massachusetts has the least (28.8).
  • Delaware residents are the most interested in finding “business help,” while Georgia residents are the most interested in finding “small-business funding.”
  • California needs the most funding for its small businesses — almost $1 billion ($955,323,489).

Small-Business Loans, Big Impact on Owners

Pursuing an entrepreneurial lifestyle is hard, and successfully running a small company is even more challenging. There are a total of 32.5 million small businesses across the U.S., which account for 99.9% of all businesses in the country. For the best chance at success, many small-business owners seek out loans to get started, or as a necessary financial push to expand their business to new heights.

While small businesses are clearly the backbone of American employment, their popularity and loan injections vary state-by-state. To learn more about the landscape of small businesses across the country, we've used data from the U.S. Census Bureau’s Business Formation Statistics to identify which states have recently had the highest influx of business applications and the ones who have regressed.

We’ve also determined which states received the most funding from the Small Business Administration (SBA) and those that haven't been as highly prioritized, using 2022 SBA lender reports. Lastly, how much influence do loans have in attracting people to apply for small businesses? Read on to find out.

Leaps in New Business Applications

Across the U.S., some states are buzzing with new business applicants, while others are falling behind. Let’s see who’s found on each end of the spectrum.

Leaps in New Business Applications

Alaska (64.9%), Vermont (61%), North Dakota (58.4%), South Dakota (55.8%), and West Virginia (43.3%) were deemed to be the top five states with the highest increase in monthly business applications from 2021 until now.

What kind of small-business opportunities are available in Alaska, you might ask? Well, there are actually many options to explore if you reside in the Last Frontier. For example, seeing as Alaska is home to one of the biggest fishing industries in the world, becoming an Alaskan seafood restaurateur might be a great idea. Or, if you have a knack for customer service, starting up your own travel agency to accommodate some of the 2 million tourists who visit the state each year is an interesting thought.

For one reason or another, some states weren’t as enticing to people looking to open a small business. The states with the highest decrease in business applications from 2021 until now were Georgia (-16.2%), Mississippi (-12.3%), Florida (-10.9%), Louisiana (-10.8%), and Michigan (-7.6%). Aside from Michigan, the least popular states for small businesses were all located in the southern U.S.

We also analyzed small-business applications exclusively in 2022, crunching the numbers per 10,000 residents. While Alaska had the highest increase in monthly business applications compared to 2021, it ranked seventh on this list. In first and second place were Wyoming and Delaware, who were well above the rest with more than 199 and 136 small-business applicants per 10,000 residents, respectively. Meanwhile, Massachusetts and Pennsylvania had the least, with only about 29 applicants per 10,000 residents each.

SBA-Approved Funding Among the States

Not everyone has the capital they need to start or grow their small business. Through the SBA, which states have been given the most guaranteed funding to put towards their entrepreneurs?

Leaps in New Business Applications

Aspiring small-business owners in California will be delighted to know that the state has received the most SBA funding in the country. With a total of $955,323,489 in loans, Californians are well ahead of the rest.

Considering the Golden State is home to more than 4.2 million small businesses, the most in the country by far, their level of SBA funding makes sense. Still, Ohio, New York, Utah, and Texas are the runners-up with hundreds of millions in guarantee dollars for their own small-business loan needs. Hawaii, Vermont, Wyoming, New Hampshire, and Maine received the least amount of SBA funding, receiving at most around $13 million (Maine) and as little as $845,450 (Hawaii).

We’ve also monitored different loan-related internet searches in 2022 to see which business-related queries were searched the most by residents in each state. Overall, interest in “PPP loan 2022” saw a massive spike in April, with a 448% increase in search volume. PPP stands for the SBA’s Payment Protection Program, which was put in place to help business owners keep their workforce employed during the pandemic.

PPP loan searches were most popular in Mississippi. Meanwhile, Delaware residents were looking for business help in general, and Georgians were a little more specific — they wanted to learn more about their options for small-business funding.

The Influence of Loans on Business Applications

Getting a small-business loan is easy in some states but can be quite a tricky process in others. Let’s see how impactful loans are in terms of how many new business applications arise from securing them.

Leaps in New Business Applications

In 2022, South Dakota has the best application-to-approved loan ratio, with 4.6 new business applications per approved loan. This fact translates to an increase of 55.8% in monthly applications from 2021. A business-friendly climate and low tax burden are both reasons why pursuing a small business in South Dakota may be a worthwhile plan.

Arizona was home to the worst ratio of approvals to applications. For every 744.3 new business applications one loan was approved. The next worst on the list were Maryland and South Carolina, with 701.3 applications per approved loan and 695.7 approval per loan respectively.

While California was given the most funding by the SBA, the state actually had a 5.6% decrease in average new monthly business applications in the same time frame. Furthermore, Ohio applied for the highest amount of loans (4,369) but had a 7.3% decrease in average new business applications per month since 2021. Lastly, Georgia residents were most likely to research “small-business funding” on Google, and the state also happened to receive the sixth highest amount of SBA funding — $343,549,524 to be exact.

Open for Business

Small businesses have been, are, and always will be a vital part of the U.S. economy. There are opportunities ready to be capitalized almost anywhere. Take Alaska, for example. Since 2021, Alaska has had the biggest uptick in small-business applications. As a major tourist destination, the state offers plenty of ways to start a new business. Loans are a vital part of the success of small businesses, regardless of where you live or want to do business.

While Alaska had a major influx of applications, California received the most SBA loans. The SBA loaned nearly one billion dollars to Californians, almost double the amount they gave to the next leading state, Ohio. California has the most small businesses in the country, so their funding naturally reflects this fact. However, their average monthly business applications have declined since 2021. Arizona had the highest amount of business applications even though they had just over $21 million in funding.

Looking ahead, we'll be closely monitoring the small-business landscape across the country. Will one state eventually take California’s place as the hub for budding entrepreneurs? Only time will tell.

Methodology and Limitations

Data was obtained from the U.S. Census Bureau’s Business Formation Statistics, the U.S Small Business Association Lender Reports for 2022, and Google Trends.

About Clarify Capital

Clarify Capital facilitates a quick and easy process for small business owners to get the loans they need to fund whatever venture they’re dedicated to pursuing.

Fair Use Statement

Know any aspiring entrepreneurs who might want to get their hands on a loan to jumpstart their business? Feel free to share our findings with them, we just ask that you do so for noncommercial use only, and please provide a link back to the original article page so the contributors can earn credit for their work.

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