Colonnade Advisors' Research Shows Total Addressable Market for Small Business Finance of $1 Trillion in Annual Funding
CHICAGO, Nov. 7, 2017 /PRNewswire/ -- The small business financing market opportunity available to non-bank lenders is large and has expanded as banks retreat. According to the U.S. Small Business Administration, there are 28 million small businesses nationwide that employ 57 million people. Colonnade's analysis using Federal Reserve Bank of New York survey data indicates that the total potential small business finance market approaches $1 trillion of annual funding.
- According to the March 2016 Small Business Credit Survey completed by the Federal Reserve Bank of New York, 59% of small business credit applications were for $100,000 or less; 44% were for under $50,000.
- 54% of small firms hold under $100,000 in debt.
- The smallest businesses – those with revenues under $100,000 – were half as likely to receive requested financing than were firms with over $10 million in revenues.
- Approximately 45% of all small businesses sought credit in the past 12 months.
There are a range of borrowing options tailored to the nature of the small businesses and their creditworthiness. The major credit products generate attractive risk-adjusted returns for lenders.
Over 50 M&A transactions have been completed in the small business finance sector over the past 36 months; the pace of activity has picked up considerably in the past year. We expect that M&A activity and valuations will remain high for the next several years, but it is important to remember that interest in the credit sector is highly cyclical. When the current economic expansion comes to an end and credit losses of small business lenders spike, acquisition activity and valuations will drop.
In its latest industry commentary, Colonnade Advisors explores trends, growth drivers and M&A in the small business finance sector. For the full industry commentary, see www.ColAdv.com.
CONTACT: Christopher Gillock, [email protected]
SOURCE Colonnade Advisors
Share this article