TULSA, Okla. — Small business owners often face an uphill battle when it comes to securing funding.
A new LendingTree Study reveals the challenge is especially steep for minority entrepreneurs.
THE STARK NUMBERS
Federal Reserve data shows about 1 in 5 small business loan applications gets denied nationwide. A closer look reveals:
• Black-owned businesses: 39% denied
• Hispanic-owned businesses: 29% denied
• White-owned businesses: 18% denied
"Anytime you're talking about business loans being denied, it makes for a real challenge because there's not much that's more important to the success of a business than being able to land funding," says Matt Schulz, finance analyst at LendingTree.
SIZE MATTERS
Small firms with just 1-4 employees face denial rates of 26% – five times higher than large companies. Even businesses that have been operating for 3-5 years face a 29% denial rate.
THE CREDIT SCORE CONNECTION
One major factor behind these disparities? Personal credit scores.
"Black Americans tend to have significantly lower credit scores than white Americans and others, and that may not seem like it would be that big of a deal that your personal credit score would be low when it comes to applying for a business loan, but the truth is that it does play a significant role," Schulz explains.
The impact is costly: "There's little in life that's more expensive than having crummy credit, and that is true even when you're talking about your personal credit score and trying to get a business loan."
WHAT BUSINESS OWNERS CAN DO
1. BOOST YOUR CREDIT SCORE
- Aim for 680 or higher (680+ preferred by most SBA lenders)
- 68% of approved SBA applicants have scores of 700+
- Pay down debt and keep credit card usage below 30% of limits
2. UNDERSTAND LOAN REQUIREMENTS "One of the best things that you can do is simply understand the qualifications and the requirements for the loan that you're applying for," Schulz says.
Many denials stem from businesses not meeting basic criteria:
- Being too large for small business designation
- Not operating long enough
- Insufficient revenue requirements
3. KNOW WHERE TO LOOK
- Visit SBA.gov for official program details
- Check LendingTree.com for comparison tools
- Contact local Small Business Development Centers
4. START WITH EASIER OPTIONS SBA Microloans (up to $50,000) may be easier to qualify for than larger 7(a) or 504 loans.
THE HARDEST LOANS TO GET
SBA loans and lines of credit have the highest denial rate at 45% – more than double the overall rate. Personal loans for business use are denied 38% of the time.
THE BOTTOM LINE
Economic uncertainty, high interest rates, and inflation have made banks more cautious. "Smaller firms, new businesses, or those unfamiliar with lender requirements are often flagged as higher risk," Schulz notes.
For Oklahoma small business owners, preparation is key. A strong credit score, solid business plan, and thorough understanding of requirements can make the difference between approval and denial.
RESOURCES:
- SBA loan information: SBA.gov
- Loan comparisons: LendingTree.com/business
- Local help: Contact Oklahoma Small Business Development Centers
"This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy."
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