In the past year the Small Business Administration (SBA) has been a lifeline for businesses struggling to survive during Covid or just getting started in the marketplace.

But an SBA loan is never a slam dunk. In fact, only 45% of the 34.7 million American adults who applied for an SBA loan in the past year were approved. That’s according to data provided by finder.com, a financial information website.

Other interesting SBA loan statistics from the past year:

• — 6% of men said they applied for an SBA loan in the past year compared to 8.16% of women (23.8 million men vs 10.9 million women).
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• — Although more men than women applied for SBA loans, women had a higher approval rate than men (51.9% approval for women compared to 41.9% approval for men).
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• — Millennials were the generation that was most likely to apply for an SBA loan with 20.5% of millennials saying they applied in the last year. They were followed by 17.6% of Gen X and 15.4% of adult Gen Z. Only 5.1% of baby boomers said they applied for an SBA loan in the past year.
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• — Although baby boomers were the least likely to apply for an SBA loan, boomers that did apply had the highest approval rate according to the findings. Baby boomers had an approval rate of 77.8%, compared to only 40.8% of millennials.
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• — Bad credit was the most common reason people were denied for an SBA loan with 51.4% of rejected applicants listing this as a denial reason. The next most common denial reason was having a criminal record at 31.2% and not having enough time in business at 31.2%.

 

There are also a number of conditions that make a business ineligible for SBA loans. Those include a business that:

— Makes more than 50% of its money from lending or investments

— A passive business owned by landlords or developers that doesn’t provide additional services

— A life insurance company

— Located abroad or owned by undocumented immigrants

— Involved in a multilevel sales plan— also known as a pyramid scheme

— Engages in illegal activity, including cannabis

— Makes more than one-third of its income from gambling

— Restricts who can use its services, such as women-only gyms

— A government-owned entity, other than a small business owned by a Native American tribe

— Promotes religion

— A co-op

— Makes more than one-third of its gross annual revenue from SBA loan packaging

— Owner has poor character based on their criminal background

— Owner has been delinquent on a federal loan, including student loans

— Involved in adult entertainment

— Makes most of its money from political activities or lobbying

• — Involved in speculation, such as oil, stocks, bonds or mining gold and silver

 

There are some exceptions, however. For example, pawnshops that make more than 50% of their revenue from regular merchandise are eligible, as are life insurance agents.

This Finder page from Certified Commercial Loan Officer Anna Serio is a good resource if you are considering applying for an SBA loan.

Regular SBA lending thrives even during Covid relief efforts