Applications for new businesses have seen an increase across the nation for the second straight month according to LendingTree. Nationwide, the number of business applications rose 84.3% in July 2020, compared to the same period last year.
Louisiana is among the states that have seen a dramatic rise in business applications. The southern state saw an almost 240% increase in application in July compared to the same period last year. In July Louisiana saw 13,100 new business applications being filed compared to the 3,860 applications filed last year.
LendingTree: New Business Applications on the Rise in the South
Like Louisiana, five other southern states namely Mississippi, Georgia, Alabama, Tennessee and South Carolina lead the nation in terms of new business applications filed in July. All five of these states saw year-over-year business application growth of more than 110%. This indicates continued business optimism particularly among southern states showing strong growth since April. In April year-over-year comparison saw Louisiana was up by 5.4% and South Carolina had seen a growth of 1.9%. Mississippi’s overall business applications in April were up by 12.5% year over year. Georgia was still ranked third highest across the states, with nearly 1,200 more business applications.
At the other end of the spectrum North Dakota, Utah, Oregon and West Virginia showed marginal growth since last year. North Dakota only saw 500 new applications in July of this year compared to the 480 last year. Similarly, growth, albeit small, was seen in Utah (8.4%), Oregon (17.8%), West Virginia (18.9%) and South Dakota (19.6%). Only North Dakota and the state of Utah showed growth under 10%.
LendingTree looked at the number of new business applications filed in each state in July 2019 compared to July 2020 using data of applications for an Employer Identification Number (EIN).
How Others Fared
Besides the Southern States, July showed positive growth in the Midwest as well with states reaching the top of the list. In it, Illinois, Michigan and Indiana are ranked in the top 10, with Ohio right behind at No. 11. These states saw the number of business applications double year over year from July 2019 to July 2020. It is to be noted that this growth in business applications is taking place as coronavirus cases tick back up in many parts of the country.
States that have been hit hard by the pandemic are showing resilience. New York which was the original epicenter of the pandemic has seen a 52.2% growth in application this year compared to 2019. Despite the challenges, the Big Apple saw 25,440 new applications in July up from 16,720 from the same time last year. Similarly, other affected states are showing progress California is up by 64.2%, Florida is also up by 85.1% compared to the same time last year. Texas for its part saw an impressive 90.5% surge with 21,200 more applications compared to July 2019.
According to LendingTree a possible reason for the surge is that many states have now reopened certain businesses. States giving businesses the green light to reopen may have been what entrepreneurs were looking for to start their ventures. Another possible explanation is that some workers are trying to strike it out on their own as entrepreneurs. This against a background of limited job openings and high unemployment. And as they strike it on their own, most of them are going to need loans. For those that are still running a business, a business loan is more important than ever to keep their company going.
Getting a Business Loan
The ebb and flow of any business is that there are cycles of progress and challenges. In some cases, having not enough cash on hand can limit your business’ growth. Loans can help you cover the expenses of expanding your business without cutting into your operational funds.
However, getting a business loan that works for you can be tricky and should be done with intention. It is important to shop around for lenders to see which financing options are a good fit for your business. Things to scrutinize include getting the right rate, term and payment for your business. In some cases, the information provided by lenders might be too opaque. When in doubt it is best to seek clarifications on those issues. Understand there is some room for negotiating with your lender prior to signing which can help you get a better deal.
The Small Business Administration offers businesses with resources on acquiring loans and other educational materials for aspiring small-business owners. They also provide financial assistance through loans and loan-guarantee programs
When you are ready to get apply make sure to have all relevant documentation. Different lenders required different sets of documentation for them to appraise your loan request as well as provide you with a loan. However standard paperwork required usually includes some documentation that reflects the performance of your business. These may include tax returns; profit and loss statement; past bank statements; legal documentation of business; balance sheet; credit history and others.
These documents will tell your lender what your credit score looks like. If you submit inadequate or financial documents and business plans you risk being the lender rejecting your application.