Credibly is a content partner of Benzinga. This post did not go through the Benzinga Newsdesk
In the wake of CNBC’s annual survey of America's Top States for Business, we recently took a look at which states have the highest ratio of fintech borrowing among small and medium-sized businesses (SMBs). The research from that article found a strong plurality of regions, populations and demographics peppered throughout the rankings.
However, the proportion of borrowers in each state only tells a part of the story. In this piece, we’ll examine how each state stacks up in terms of the concentration of capital acquired through non-bank lenders.
As in the previous article, we have drawn our conclusions from client data provided by SMB fintech lender Credibly in addition to small business data from the U.S. Small Business Administration. Here’s what we found.
Capital Flows West
While the top of the rankings for the average amount borrowed contain states throughout the US, the western region of the country has the highest concentration of companies borrowing in bulk. Utah, Oregon, New Mexico and Nevada (and Hawaii, way out West) all saw average borrowing amounts more than $10,000 above the national average of around $60,000.
The South and Midwest also have several states with high-ticket borrowing. However, the Northwest is the one region that did not have much representation on the list. States such as Idaho, Montana, and Washington borrowed $5,000 - $15,000 under the national mean, placing them near the bottom of the list.
Borrowing Booms In Growing States
Another interesting phenomenon in the rankings is that the states with the highest concentration of SMBs are routinely lower on the list than those with more middle-of-the-road SMB representation. Business-dense states like New York, Texas, California and Georgia all fall outside not only the top 10 but the top 20 highest borrowing states, while other high-population states like Illinois, Pennsylvania and Ohio are all clustered near the bottom half.
States with low business-density are also rarely near the top of the rankings, though the concentration is not as pronounced as their high-density counterparts. Overall, it seems the businesses with the highest capital demand are in states like Virginia, Utah and Minnesota, which have medium-sized populations but have seen strong population growth in recent years.
Top States For Business Top The List
Although there was little correlation between CNBC’s overall rankings and the number of businesses accessing nonbank lenders, there is some connection to the average dollar amount for which businesses in each state applied.
Four of the top 10 best states for businesses were also in the top 10 for the average amount borrowed, those being Virginia, Minnesota, Utah and, at the top spot, Nebraska. Those states ranked 1st, 7th, 4th and 8th, respectively.
Although other states near the top of CNBC’s survey like Texas, Colorado and Georgia, are lower on the list of average amount borrowed, only Washington is in the bottom 10 and all are within $10,000 of the national average for fintech borrowers.
These results, paired with CNBC’s survey, paint a picture of a rapidly changing private business environment, one that is seemingly more financially responsive to changes in the regional makeup of the country.
The correlation between growth in private business within each state and elevated funding from online lenders also illustrates how fintech borrowing has fostered a more democratic means of accessing needed capital. Previously, small business loans at this size and scale were rare to non-existent, particularly outside of business-dense areas where business owners were forced to rely on small regional banks or credit unions whose average loan amount was routinely above $100,000.
SMB lenders like Credibly have since made more targeted lending available throughout the country. And, as a greater number of small businesses from across the country discover alternative lending, the next financial hub could be coming to a city near you.
Average Amount Borrowed From Fintech Lender Credibly
1. Nebraska - $84,843 18. South Dakota - $64,383 35. Michigan - $56,534
2. Utah - $81,000 19. Arizona - $63,909 36. Missouri - $56,218
3. Oregon - $78,241 20. Wisconsin - $63,433 37. Georgia - $55,358
4. Iowa - $76,809 21. California - $62,828 38. Kansas - $55,175
5. Alabama - $76,419 22. North Dakota - $62,510 39. Alaska - $55,119
6. New Mexico - $75,692 23. New York - $61,738 40. Pennsylvania - $54,529
7. Hawaii - $74,945 24. North Carolina - $61,073 41. Washington - $54,377
8. Nevada - $72,343 25. New Hampshire - $60,111 42. New Jersey - $52,543
9. Minnesota - $71,690 26. Illinois - $58,547 43. Idaho - $51,948
10. Virginia - $68,664 27. Arkansas - $58,539 44. Maryland - $51,278
11. Maine - $68,108 28. Massachusetts - $57,993 45. Louisiana - $51,097
12. Vermont - $68,080 29. Rhode Island - $57,975 46. Kentucky - $49,800
13. South Carolina - $68,003 30. Colorado - $57,864 47. Mississippi - $49,230
14. Tennessee -$66,569 31. Florida - $57,783 48. Delaware - $48,428
15. Oklahoma - $65,527 32. Indiana - $57,772 49. Montana - $46,347
16. Wyoming - $64,514 33. Ohio - $57,031 50. West Virginia - $36,595
17. Connecticut - $64,502 34. Texas - $56,582
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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