In an examination small business loan funding trends, restaurants & accommodation businesses had the highest loan approval rates (51%) in 2018 compared to other industries, including retail, health care, and professional and personal services, according to a new study by Biz2Credit.
Industry Approval rate
Restaurants & Accommodation 51%
Health Care and Social Assistance 37%
Retail Trade 36%
Information Technology (IT) 35%
Professional Services 31%
Personal Services 16%
“Restaurants and other food and accommodation businesses are inherently more risky than other types of businesses. However, with a strong lending atmosphere, the approval rates have been surprisingly high,” said CEO Rohit Arora, who oversaw the research. “One reason for this result is that many food businesses do not qualify for traditional bank loans, but they are able to get funding via non-bank lenders, who charge higher rates but are willing to provide funding.”
Similarly, retail businesses have seen high approval and funding rates on the Biz2Credit platform.
For the analysis, Biz2Credit examined the financials of companies that applied for funding in 2018 in the following sectors: restaurants & accommodation, healthcare, personal services, professional services, retail, and information technology (IT).
Technology companies led in terms of average funded amount, followed by retail, restaurants, personal services, healthcare, and business & professional services.
Industry Avg. Funded Amount
Technology (IT) $102,029
Retail $73,564
Restaurant & Accommodation $59,746
Personal Services $52,989
Healthcare $49,835
Business & Professional $43,248
“Technology firms, which have performed well in this economy, received the largest average amount of funding,” Arora said. “Tech businesses received the highest level of funding in New Jersey. The highest levels for retail and restaurants & accommodation were in New York. Personal services funding was highest in Texas, but professional services funding was highest in Massachusetts. For healthcare, California was the leader.”
Industry State Avg. Funded Amount National Avg. Funded Amount
Technology (IT) New Jersey $251,250 National $102,029
Retail New York $121,867 National $73,564
Personal Services Texas $116,154 National $52,989
Restaurant New York $106,701 National $59,746
Business & Professional Massachusetts $77,538 National $43,248
Healthcare California $66,010 National $49,835
“Businesses in New York, New Jersey, Texas, and California all did well – particularly in IT and, somewhat surprisingly, in retail,” Arora explained. “These states are home to many immigrants and first-generation Americans, who are typically very entrepreneurial. They are also areas where the real estate markets are strong.”
The industry with the most startup growth was personal services, for which the average age of business was slightly more than three years (37 months), followed by retail (44 months) and restaurants & accommodation (46 months).
The credit scores of the owners of IT companies rated highest, followed by the scores of business owners in the retail, healthcare, restaurant & accommodation, business & professional Services, and personal services.
Industry Average Credit Score
Technology (IT) 633
Retail 619
Healthcare 617
Restaurant & Accomodation 615
Business & Professional Services 615
Personal Services 590
“Technology firms had the highest credit scores and, not surprisingly, the highest average funded amount,” Arora explained.
Industry Average Revenue
Restaurant & Accomodation $509,996
Healthcare $403,828
Retail $402,403
Technology (IT) $357,083
Business & Professional Services $328,361
Personal Services $215,796
“Restaurants have the highest revenues. However, they also are high cost/low margin businesses,” Arora said. “Healthcare businesses had the second highest average revenues. With the oldest of the Baby Boomers now reaching their mid-seventies, I expect that companies that cater to their needs will continue to thrive.”
Industry breakout of businesses
Accommodation & Food Service: Restaurants/bars, caterers, hotels, other food businesses.
Business & Professional Services: Accounting and tax preparation, bookkeeping, payroll services, legal services, marketing, and design services, among other businesses.
Healthcare: General medical services, doctor’s offices, dentist’s offices, visiting nurse services, residential care facilities, outpatient care centers (ex: physical therapy), mental health facilities.
IT: Software developers, consultants, staffing firms
Personal Services: Beauty (hair and nail salons), gyms, dance studios, yoga studios, laundry and dry cleaning, landscaping, cleanings services.
Retail Trade: Brick-and-mortar stores, ecommerce companies, clothing and fashion, florists, grocery stores, pharmacies, home furnishings, and vending machine operators.