These States Have Seen The Most Business Capital Come From Fintechs

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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