Finance Software

9 US Small Business Finance Statistics Entrepreneurs Need to Understand

Published by in Finance Software

Each small business is one-of-a-kind. Every founder has their own dream, backstory, and desires. That said, there are a lot of trends that tie businesses together. Statistics help us understand our place in the world, even down to our place in our city.

These nine facts about the U.S. small business landscape will give you a sense of how the work you do plays into the larger American small business landscape.

Also: stats are fun.

1. Small Businesses employ 48% of all American workers

Despite their name, small businesses make up a huge part of U.S. employment. According to the Small Business Administration (SBA), small businesses employ more than 56 million people, 48% of the total American workforce.

While this is one of those headline statistics—I’m guessing it gets quoted by four politicians each day—it’s also one that’s been shifting recently. For the past 15 years or so, small businesses have employed around the same number people, but that’s a smaller percentage of the overall workforce.

Over that same 15 year period, total employment has risen by around ten million. The largest portion of that growth has come from businesses with over 500 employees.

2. 89.4% of small businesses have less than 20 employees

There’s no hard and fast rule for what counts as a small business. While the government breaks business statistics down into size categories, none have convenient labels such as “Small Businesses” or “Enterprise Businesses.”

When we talk about small businesses, then, we’re somewhat left to our own devices. The SBA says that any company with less than 500 employees counts, as long as it’s a nonmanufacturing business. Gartner cuts it off at 100 employees but lets medium businesses—the “M” in SMB—run up to 999.

As it turns out, strict definitions aren’t that necessary as most small business have less than 20 people on staff. 89.4% of small businesses with over $1,000 in annual revenue have fewer than 20 employees.

3. Small manufacturers employ more people than most small businesses

At the sector level, manufacturing contains, unsurprisingly, the largest set of small businesses. 24% of small manufacturers employ more than 20 people, while the small business average is just over 10%.

This makes a lot of sense, as manufacturing is often a complex process. Educational services, accommodation and food services, and utilities all skew high, with 20% of each sector consisting of businesses with more than 20 employees.

4. Real estate companies are the smallest of small businesses

At the other end, the smallest small businesses operate in the real estate industry. Just 4.5% of real estate businesses employ more than 20 people. Even with a small average, the small business real estate industry still accounts for 1.4 million jobs in the US, just at the small business level.

Other smaller-than-average industries include finance, agriculture, and construction; less than 10% of small businesses in these sectors have more than 20 employees.

5. 679,072 U.S.businesses were under one year old in 2015

New businesses are the lifeblood of the small business community. We all know that starting a new business is difficult. We know that struggling new small businesses close their doors quickly.

To keep employment robust and give us the success stories we crave, we need the new kids on the block (not to be confused with the New Kids on the Block).

In 2015, there were 679,072 businesses across the U.S. that had been operational for less than a year. In a perfect world, we’d see most of these businesses survive to five or ten years old, but until we solve the survival problem, we’re going to need more young businesses.

6. 3,022,581 new jobs were created by young businesses in 2015

The abovementioned under-a-year-old businesses accounted for more than 3 million new jobs in 2015. These jobs plant the seeds for future growth in American small businesses and sustain the country, overall.

7. 95,362 SBA-guaranteed loans issued in 2016

To maintain job creation and help new businesses grow, the SBA supports small businesses by offering business and educational programs, including a loan guaranty program.

The SBA itself doesn’t issue loans, but it does guarantee certain loans. In 2016 it approved over 95,000 loans, 70,000 of which were non-disaster loans. Disaster loans are exactly what they sound like, loans to help businesses recover from disasters.

8. SBA-approved loans valued at $33,333,955,197 in 2015

The 70,000 non-disaster loans approved by the SBA in 2015 guaranteed almost $32 billion for businesses—over $33 billion including disaster loans—shaking out to an average of $454,719 per loan. That’s money these businesses could use to hire new people or grow their operations.

For those of you wondering about disaster loans—a great idea if you’re in a hurricane-prone area, for example—those averaged $57,295 / loan in 2015.

9. General loan guaranties are the most common

The most common loans approved within the SBA’s guaranty program are 7a loans, general small business loans used for just about any business purchase or need. The SBA guaranteed more than 64,000 7a loans in 2015, accounting for 67% of all SBA-approved loans.

SBA loans top out at $5 million, but the average is just $382,502. The guaranty program has requirements for businesses requesting funds; the SBA isn’t just throwing cash out the door at anyone who walks by. Very few small businesses exist at the intersection of needing millions of dollars in support and being in a strong enough position to receive approval.

Any other small business finance statistics that you love?

I rounded up these nine fun stats that show what American small businesses are doing and how they’re doing it, but they don’t tell the whole story.

Are there any small business stats you find interesting that I missed? Do you track any statistics to use as a barometer of how your small business is doing? Let me know in the comments so I can add them in when we revisit and update this piece.

If you’re interested in the SBA’s loan guarantee program, visit the organization’s site, but make sure you’ve got your finances in order before you apply. Capterra can hook you up with budgeting and accounting software to help you put your best foot forward.

Looking for Accounting software? Check out Capterra's list of the best Accounting software solutions.

About the Author

Andrew Marder

Andrew Marder

Andrew Marder is a former Capterra analyst.


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