Why the South Atlantic Is Such a Stable Environment for Small Businesses

According to a recent Lendio report, demand for business loans in the South Atlantic region grew more than any other region in the country during Q3 2019. For four consecutive quarters, the region has ranked No. 1 in the country for the number of loan inquiries submitted, loans funded, and the total dollar amount borrowed.

The region’s small businesses have proven successful in acquiring financing as well as showing consistent growth. However, South Atlantic businesses still face challenges, particularly when it comes to their credit scores.

Growth in All Lending Metrics

Business experts measure growth in small business lending using a number of different metrics. These include the number of loan inquiries, the number of businesses funded, the total dollar amount funded, and the average loan amount. In this report, the South Atlantic region ranked first in the nation for growth in the number of loan inquiries and for the total dollar amount funded there. The region ranks second for the number of businesses funded and third for growth in the average loan amount.

These rankings bode well for small business owners in the region who are looking to grow or expand. The South Atlantic is one of only three regions in the nation to see growth in the average loan amount during Q3. Business owners in the region also demonstrated overall growth, as they reported the second-largest increase in average annual revenue and third-largest increase in average personal income.

Struggles With Credit Scores

Credit scores have been hot and cold for the region’s business owners over the last year. South Atlantic businesses had the second-lowest average credit score in the nation in Q3, and when averaged over the entire year, they have the lowest. Seven of the nine South Atlantic states and district ranked among the bottom ten states in the nation for the average credit score. Washington D.C., on the other hand, ranked first in the nation over the last year.

Despite high levels of growth in the aforementioned areas, credit scores are among the lowest in the nation. Business owners would do well to regularly check and work to build their business credit.

Women and Millenials Struggle to Find Capital

The report also shines a light on demographics of borrowers in the region; both gender and age appear to influence small business owners’ search for loans. For female-owned businesses in the area, the outlook is good. In Q3, the South Atlantic states had the highest percentage of female borrowers in the nation. It is worth noting, however, that male borrowers in the region outnumber female borrowers four to one. 

When it comes to funding younger business owners, the region fell behind in Q3. The South Atlantic had the lowest percentage of borrowers under age 34 in Q3, a 7% decrease from the previous three-quarter average. This is one area in which the region has ground to make up. A report recently indicated that the number of borrowers under 34 increased in 22 states nationwide, but only 2 of those states are in the South Atlantic region.

Despite hills and valleys in some areas of small business financial health in the region, the South Atlantic proves to be one of the most stable environments for small businesses in the nation. The region’s increase in loan inquiries, loans funded, and total dollars funded for four quarters straight is an impressive feat, and this should give a boost of confidence to small business owners that growth capital is well within reach.