Information technology (IT) companies received the most funding of any industry in terms of volume, highest average amount of funding, and highest average income, new primary financial data study finds by Biz2Credit. The study also found that demand for IT services increased during the pandemic, leading to improved financial performance, and IT business owners had the highest average credit score.
Accommodation and food services had the highest average approval rates for funding requests. This was the second largest percentage of funding given to small businesses. These companies suffered greatly during the pandemic and were able to take advantage of funding programs like the Paycheck Protection Program (PPP) that were put in place to help them. Accommodation and food services industry finished second in terms of total funding volume
the Biz2Credit 2021 Best Small Business Industries Report analyzed the financial performance of more than 200,000 businesses that have used the company’s online funding platform to apply for funding, including forgivable loans through the Paycheck Protection Program (PPP) of the SBA, in 2020-2021. Analysis looked at the following metrics: annual revenue, operating expenses, loan approval rate, total amounts funded, business owner credit scores, and company age.
The sector with the highest total funding volume in 2020 was the Technological Information (IT) industry, which obtained 18% of all funding issued. The second most funded industries in the country were accommodation and food services (15.3% of funding volume) and health care and social assistance (8.2% of funding volume)
· THIS business owners had the highest average credit score (636), followed by Real Estate (633), Finance and Insurance (624), Professional and Technical (623) and Health Care (619).
The companies of IT sector had the highest average income ($ 1,518,640). Wholesale trade ($ 1.3 million), manufacturing ($ 1.1 million), retail trade ($ 750,000), accommodation and food services ($ 626,000) and health care and social assistance ($ 612,000).
· Accommodation and food services had the highest approval rate for financing requests at 57%. Retail trade (55%) and healthcare (54%) followed closely, while Transportation and warehousing was the industry with the youngest companies. This corresponds to the greatest number of recent startups.
· Health care and social assistance had the oldest companies with an average age of 91 months (7.6 years).
Further findings revealed that a Chartered Professional Accountant (CPA) and Chartered Professional Accountant (CPA) proved invaluable to small business owners during the pandemic. The report also analyzed how often companies across different industries worked with a CPA on funding applications. He looked at data from over 40,000 small businesses that have partnered with CPA firms to process and fund more than $ 1 billion in PPP loans through the CPA business finance portal. The cloud-based funding platform was developed by Biz2Credit and CPA.com specifically for accountancy firms and recently added a term loan option to support the growing role of CPA firms in business advisory services. .
The platform data was analyzed as part of the Biz2Credit report. The top five industries working with CPA firms are accommodation and food services (17.8%), construction (13.6%), healthcare (13.3%), professional services (12.0%) and other services (9.5%), which include beauty salons, repair shops, laundry services and a range of other services.
We know from our experience with small business relief efforts during the pandemic that CPAs are a critical bridge in securing funding for many business owners. Providing CPA firms with easier access to financing for their clients will have benefits going forward, but especially for industries that fare less well as the recovery strengthens.
The report covers industries based on the NAICS classification system including accommodation and food services, business and professional services, healthcare, information technology, manufacturing, personal services, retail and wholesale.
The study aimed to identify the top industries for small businesses in the previous year and measure the performance of businesses based on their industry affiliation. All of the companies included in the survey had fewer than 250 employees and less than $ 10 million in annual revenues. The report covered small businesses across the country, from start-ups to established businesses. Biz2Credit also analyzed Paycheck Protection Program (PPP) loan data from the SBA database.