January 11, 2024 New Business Applications Reach Record 16 Million
According to the SBA press release 24-04 "Small Business Boom with more Americans than ever applying to start a business". New Census data showing a record-breaking 5.5 million new business applications were filed in 2023 alone, making it the strongest year of new business applications on record and the third consecutive year of historic small business growth.
Americans across the country and in a wide range of industries filed a record five and a half million new business applications, bringing the total number under this Administration to a record-breaking 16 million. America’s great diversity continues to propel entrepreneurship with Black, Latino, and women founders starting up at higher rates than ever. As we enter 2024, the SBA will continue its work to increase access to the resources needed to start and grow resilient new businesses, harnessing the unique optimism and ingenuity of American entrepreneurs.”
Who is Applying for SBA Loans?
Record business starts: 16 million new business applications have been recorded since 2020 - an 86% increase relative to the average pace of annual growth from when the survey began in 2004.
Record establishment growth: Department of Labor data reflects that Americans aren’t just applying to start businesses — they’re turning those applications into real business establishments:
The number of private establishments has increased by 1.3 million since the start of the Biden Administration. The annual pace of establishment growth during the Biden Administration (5.4 %) is faster than at any point in the last quarter-century.
2.8 million private-sector establishments were born. More establishments have been born per year during the Biden Administration (1.4 million per year) than at any point since the series began in 1993.
Ongoing small business job growth: More small businesses mean more small business jobs. From 2021 through the first quarter of 2023, the U.S. economy added a net 7.2 million small business jobs, with each quarter showing net-positive small business job growth of more than 370,000.
Women and minority entrepreneurs have made an outsized contribution to new business creation.
Black business ownership is growing at the fastest pace in 30 years, and the share of Black households owning a business has more than doubled, from 5% to 11% between 2019 and 2022.
Latino business ownership is growing at the fastest pace in at least a decade, rising from 7% to 10% between 2019 and 2022.
The number of women-owned businesses has grown dramatically. From 2019 to 2023, the growth rate of women-owned businesses was 94% greater than the growth of men-owned businesses.
Business growth is seen broadly across industries, from tech startups to Main Street
Large industries lead application growth: From 2021-2023, the top 10 sectors ranked by total business applications spanned diverse industries, led by retail, professional services, and construction.
Innovative startups growing rapidly: The country’s most innovative pockets of enterprise all experienced establishment growth. Entities engaging in R&D across Nanotechnology, Biotechnology, Physical, Engineering and Life Sciences, and the Social Sciences and Humanities experienced about 40% growth in the number of establishments throughout the Biden Administration through Q2 2023.
$52B in SBA capital supported the small business boom in 2023
SBA lending to small businesses reflects both the increase in new business creation and the growing participation of women and minority entrepreneurs in the small business boom.
Minority-Owned Small Businesses: Since 2020, the share of the SBA’s loan portfolio going to minority-owned businesses has increased from 23% to more than 32%.
The number and dollar value of SBA-backed loans to Black-owned businesses has more than doubled.
The SBA backed $3 billion in loans to Latino-owned businesses in FY23 — a record-breaking high.
Lending to AAPI-owned small businesses is on the rise, with loan count and total loan dollars both increasing by over a third since 2020.
Loans to Native-owned small businesses are up 70% and total loan dollars have nearly doubled since 2020.
Women-Owned Small Businesses: Lending to women-owned small businesses is once again on the rise, with loan counts increasing by 70% since 2020 and total loan dollars exceeding $5 billion in 2023.
Veteran-Owned Small Businesses: Loans to Veteran-owned small businesses are up by a third since 2020, with total loan dollars exceeding $1 billion in 2023.
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit sba.gov.
Will I Need a Feasibility Study for my SBA 504 Loan?
Feasibility-Study.com provides feasibility studies for the SBA 504 Loan Program nationwide in a wide array of sectors.
Depending on the project type, if a new start-up, new construction or expansion of an existing business, we are called upon to provide the required SBA Feasibility Study that complies with CDC and SBA requirements.
Ask your CDC loan officer about their requirements. Often we are called after the loan application has been reviewed by the underwriters. You can recommend Feasibility-Study.com as your SBA Feasibility Study provider.
We have worked with many of the over 200 CDCs over the years and understand how rigorous their SBA feasibility study requirements are. They tend to focus on the ability of the business to compete in the market.
According to the Small Business Administration (SBA) § 120.160 Loan Conditions, The following requirements are normally required by SBA for all business loans: (a) Personal guarantees. Holders of at least a 20 percent ownership interest generally must guarantee the loan.
SBA, in its discretion, consulting with the Participating Lender, may require other appropriate individuals to guarantee the loan as well, except SBA will not require personal guarantees from those owning less than 5% ownership.
(b) Appraisals. SBA may require professional appraisals of the applicant’s and principals’ assets, a survey, or a feasibility study.
(c) Hazard Insurance. SBA requires hazard insurance on all collateral. (d) Taxes. The applicant may not use any of the proceeds to pay past-due Federal and state payroll taxes.
Lender to Lender and CDC/504 loan program, feasibility studies are often required for new start-up businesses, new construction or expansion.
SBA Feasibility Study Requirements
Executive Summary
Economic Feasibility
Market Feasibility
Technical Feasibility
Management Feasibility
Executive Summary
Introduction/Project Overview (Brief general overview of project location, size, etc.); Economic feasibility determination/opinion; Technical feasibility determination/opinion; Market feasibility determination/opinion; Financial feasibility determination/opinion; Management feasibility determination/opinion; Recommendations for implementation, including an overall conclusion as to the business’ chance of success.
Economic Feasibility
Information regarding project site; Availability of trained or trainable labor; Availability of infrastructure, including utilities, and rail, air and road service to the site. This includes an economic overview nationally, state level, and county level. Also included is a demographic overview and traffic counts and other pertaining items related to the business type.
Market Feasibility
This is a critical part of an SBA Feasibility Study. SBA 504 and 7(a) Loan underwriters use this section to determine your market share, and how well your enterprise can be accepted into the market. Generally, they ask we follow the USDA guide for this section as follows:
1.Information on the sales organization and management; Nature and extent of market and market area; Marketing plans for sale of projected output - principal products and byproducts; Extent of competition including other similar facilities in the market area; Commitments from customers or brokers - principal products and byproducts. Adequacy of raw materials and supplies. Projected total supply from members and non-members. Projected competitive demand for raw materials. Procurement plan and projected procurement costs. Form of commitment of raw materials (marketing agreements, etc.).
Each project is different, thereby we modify this section to accommodate a complete analysis of the market and competitors. Items included in the competitive analysis include information from Dun & Bradstreet, Moody's Analytics and ArcGIS Business Analyst to estimate the market area capacity for your venture.
Technical Feasibility
Again, we as asked to use the USDA Guide RD Instruction 4279-B for this section as follows:
Suitability of the selected site for the intended use including an environmental impact analysis. Report must be based upon verifiable data and contain sufficient information and analysis so that a determination may be made on the technical feasibility of achieving the levels of income or production that are projected in the financial statements. Report must also identify any constraints or limitations in these financial projections and any other facility or design-related factors which might affect the success of the enterprise.
Report must also identify and estimate project operation and development costs and specify the level of accuracy of these estimates and the assumptions on which these estimates have been based. Project engineer or architect may be considered an independent party provided neither the principals of the firm nor any individual of the firm who participates in the technical feasibility report has a financial interest in the project and provided further that no other individual or firm with the expertise necessary to make such a determination is reasonably available to perform the function. Commercial Replication. Risks Related: Construction, Production Regulation and Governmental Action.
Financial Feasibility
In this part of the SBA Feasibility Study, all assumptions related to the development of the pro forma statement are identified and explained. These items are market driven. We located financial statements through various sources that are used by SBA Loan underwriters whereas industry financial ratios are provided.
If your business is an expansion of your existing business, we gather your balance sheet and financial statements as historical support for future plans as well.
Based on information gathered in the process of the Economic, Market and Technical Feasibility sections of the study, we can then identify and use market indications to develop the pro forma statement such as prices, rents, vacancies, usage rates, etc. Operating cost are also compared with your historical figures, or market indications from sources that evaluate hundreds of actual financial statements.
Then a 10-year pro forma statement is developed. In the SBA Feasibility Study, a monthly pro forma is presented based on seasonality, if any for your business. The EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is then evaluated by way of financial analysis including:
SBA Feasibility Study Financial Analysis:
Pro forma (10 years)
Discounted Cash Flow Analysis (DCF)
Structure of the Assets and Liabilities
Net Assets (Net Worth)
Financial Sustainability Analysis
Key ratios of the company's financial sustainability
Working capital analysis
Liquidity Analysis Financial Performance
Overview of the Financial Results
Profitability Ratios
Analysis of the Business Activity (Turnover Ratios)
Labor productivity
Key Ratios Summary
Rating of the Financial Position and Financial Performance
Bankruptcy Test
Calculation of the Final Rating of the Financial Condition
Management Feasibility
This section includes a discussion concerning the adequacy of management (experience, training, and education of management). Discuss continuity of management (is there a continuity of management plan and is there depth of management?). Evidence that continuity and adequacy of management has been evaluated and documented as being satisfactory. Discuss motivation and character of management. Risks Related to: Applicant as a company (i.e. development-stage) Conflicts of interest or appearances thereof.
SBA Feasibility Study and Business Plan Package
The SBA often requires both an SBA Feasibility Study and SBA Business Plan in the required SBA format. We offer a special price for both items prepared together. Ask us how.
Feel free to call us directly at 1-800-498-6850, or book a meeting for more info.
Publisher Details: SBA Feasibility Study Consultants: USDA Feasibility Study Consultants: Feasibility-Study.comhttps://www.feasibility-study.com/
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