While small businesses have always been the backbone of any community, its felt that in recent years some major corporations have begun to takeover the market in turn destroying the small business economy. Don’t let that narrative fool you!
In the age of technology people now have more access to education, resources and visibility on what it takes to start a business. Entrepreneurs have been working hard all across the country to share their vision and create viable businesses every day. The U.S. Census released the Business Formation Statistics for March 2023, and guess what? It was another great month! According to the Census chart there were a whopping 451,752 new business applications in March.
This surge in new business applications actually started during the pandemic in 2020 and hasn't slowed down since. Before the pandemic hit, we were looking at an average of around 300,000 applications per month. But since Q3 of 2020, there has been an average of about 450,000 applications each month.
But here's the thing: not all of these applications will result in actual businesses. You see, these applications are mainly for a federal tax I.D., and only around 20% of those who apply for one actually go on to start a business. So while 450,000 new businesses did not start in March, people continue to pursue the idea of creating small businesses everywhere.
However, the good news is that more applications also mean more new small businesses and solopreneur ventures. Based on March's applications, we're looking at approximately 90,000 additional businesses popping up over the next year or so.
What does that mean for lending institutions?
Well, the surge in new business applications presents a unique opportunity for lending institutions to support and engage with aspiring entrepreneurs.
For lending institutions, this signifies the increase for demand and need to adapt and cater to the evolving landscape of small business lending. With more applicants seeking funding, it's essential for lenders to streamline their processes and provide efficient and accessible financing options.
By recognizing the changing dynamics of the market lending institutions can tailor their loan products and services to meet the specific needs of these small business owners through improved application procedures.
Additionally, building strong relationships and utilizing technology from with organizations that focus on small business lending is a must. The surge in new business applications presents a valuable opportunity for lending institutions to play a pivotal role in the growth and success of emerging businesses.
By adapting their lending practices and staying attuned to the evolving small business landscape, lenders can position themselves as reliable partners for aspiring entrepreneurs, helping to fuel economic growth and innovation in their communities.
If you are a lender interested in streamlining your lending process, make sure to check out our other blogs here. Presta is an all-in-on lending solution built tailor-made for small business lenders. Book a call with our team below!