From time to time, businesses require additional funds to grow and expand. Unfortunately, that does not mean that every entrepreneur can easily secure the cash they need. With millennials launching businesses at an average age of 27, compared to 35 for baby boomers – and at twice the rate – you might assume that millennials are also the most likely group to receive small business funding. If so, a recent study by Biz2Creditmight surprise you.
This study of 32,000 loan applications found that small business owners 30-49 years-old were most likely to apply for funding. However, it was the older entrepreneurs that were most likely to receive approval.60 percent of applicants fell within the thirties to forties age group, but it was applicants over 60 years-oldthat experienced the highest approval rates (even though they made up a very small percentage of the entrepreneurs analyzed in the Biz2Credit study). Since traditional lenders and banks want to see significant financial data over a period of time, this criteria favors older applicants with long established businesses.
The data from the study also revealedthat:
- Small business owners 60+ had the highest annual revenue ($275,766)
- Millennials had the lowest annual revenue ($177,085)
- Entrepreneurs 60+ had the highest credit score (601)
- Millennials had the lowest average credit score (477)
- Those 60+ experienced the highest approval rate of 30%
- Millennials had an approval percentage of 26%
Thus, applicant age, annual revenues, time in business and creditworthiness play a huge role in an entrepreneurs’ ability to secure the business financing they need. It would seem time is the biggest ally.But what about the situation for young entrepreneurs? Are there alternative business funding options available for them?
According to Forbes, “They are more likely to get that funding from non-bank lenders that charge higher interest rates. They must strive to maintain solid credit scores and solid performance over time in order to get access to capital at better rates and terms.”
For those who struggle to find traditional sources, they should consider a high-risk specialist like First American Merchant’s cash solutions. Unlike working with traditional lenders, FAM approves those with bad credit and limited time in business; entrepreneurs can receive their funds in as little as 24 hours. The key is to find the working capital solution that fits your business’ unique needs, while also avoiding as many fees as possible.