The numbers are in: Younger business owners are most likely to apply for small business loans but older business owners are most likely to be approved and receive funding.
Researchers examined 32,0000 small business loan applications filed over the past 12 months by business owners ranging from 20-29 years old to ages 60 and over, according to Forbes. All of the businesses involved in the study had fewer than 250 employees or earned less than $10 million in annual revenue.
Nearly 60% of applicants were in their thirties or forties but applicants over sixty had the highest approval rates, despite being the least likely age groups to apply for funding. This finding confirms that more established businesses with higher revenue and higher credit scores are more likely to be approved for small business loans than younger companies with weaker credit scores and less revenue.
Further data, however, proved far more interesting since it suggests that way too many business owners are unaware of alternative business financing.
Credit Score Still Reigns Supreme
Credit score and years in business seem to have been major reasons younger business owners had a much harder time earning approval than applicants over 60. Business owners ages 30-39 reportedly had an average credit score of 517 and only a 16% approval rate. Some of these business were nearly three years old, and earned just $40,000 less than businesses that had been operating for approximately two more years.
Had these younger business owners consulted United Capital Source for business funding, they would have learned that applicants need only a FICO score of at least 500 to access small business loans with the utmost convenient terms. We even offer bad credit business loans for certain applicants because we understand that a low credit score is in no way an indication of poor revenue. A merchant cash advance loan, for example, is extremely easy to pay back because instead of fixed, monthly payments, the debt is repaid via a percentage of future credit card sales. This type of working capital loan doesn’t have a strict due date and can therefore be paid back whenever sales start to pick up.
No Reason To Give Up
Business owners looking to build up their credit scores in order to receive better loan terms should consider taking out short-term working capital loans or bad credit business loans with United Capital Source. Building up a credit score via credit card utilization can take time but you will see your credit score skyrocket after just a few monthly loan payments are made. And once the loan is paid back in full, you will likely become eligible for a second, much larger loan with the terms you’ve been looking for!
As for time in business, we base our decisions on the performance of the business as of late rather than the date in which the business opened. Our borrowers must have generated at least $10,000 or more in monthly sales throughout the past 3 months, or the last 3 months before the application was filed.
Banks Aren’t Getting Any More Generous
Researchers also found that applicants tended to become frustrated with the poor customer service from banks. Not only do you have to wait just to have a consultation, but any last-minute changes in loan structure or terms requires tedious back-and-forth communication that only extends the waiting game. With UCS, all it takes is one phone call or email to speak with a business funding expert immediately or have your application reviewed. One of our clients needed an increasing amount of funding available to him on a regular basis, so we made sure to get that money into his bank account without him having to make a call or send an email right before it was time to handle monthly expenses.
Industry Discrimination Is Real
After analyzing the businesses that were most likely to gain approval, the research team concluded that banks and online lenders are currently favoring IT companies and tech startups. We lend to dozens of industries but it appears that our competitors are only looking to capitalize on what’s trendy or making the most money. Many of the established businesses featured in the report were mom-and-pop shops, and at UCS, we understand the tremendous role they play in the economy. No business is too small for approval, and we do not discriminate based on stereotypes claiming that one industry is more “risky” or less profitable than another.
Banks offering startup funding (sometimes with 0% interest) are giving the impression that startups should grow before figuring out if they are even profitable. But trying to grow rather than earn a steady profit too quickly can result in cash flow balances, which will make it nearly impossible to be approved for small business loans. United Capital Source approves borrowers who can stay on top of their expenses, even if they have a history of bad credit. This goes for younger borrowers as well; they just have to be in business long enough to know their company’s ups and downs. Let your business’s performance speak for itself and we will reward you with the most convenient terms you can find in 2017!