IT Firms Have Received More Funding Than Business in Other Industries in 2021

A new study from Biz2Credit that analyzed 2020 and 2021 industry trends among small businesses found that information technology firms received the most funding of any industry in terms of volume and the highest average amount of funding during the study time frame. In addition, the study found that IT firms had the highest average revenue and that owners of IT businesses had the highest average credit score during the study time frame. The accommodation and food services industry finished second in terms of total funding volume. Food services businesses also had the highest approval rate for financing.

The new study analyzed the financial performance of more than 200,000 companies that used Biz2Credit’s online funding platform to apply for funding, including forgivable loans through the SBA’s Paycheck Protection Program, in 2020 and 2021.

The analysis examined the following metrics: annual revenue, operating expenses, loan approval rates, total funded amounts, business owners’ credit scores and age of business.

Study Highlights

• The sector with the highest total volume of funding in 2020 was the IT industry, which secured 18% of all funding issued. The next highest funded industries across the United States were accommodation and food services (15.3% of funding volume) and healthcare and social assistance (8.2% of funding volume).

• Business owners in the IT industry had the highest average credit score (636), followed by owners in real estate (633), finance and insurance (624), professional and technical services (623) and healthcare (619).

• Businesses in the IT sector had the highest average revenue ($1,518,640). Next were businesses in wholesale trade ($1.3 million), manufacturing ($1.1 million), retail trade ($750,000), accommodation and food services ($626,000) and healthcare and social assistance ($612,000).

• Accommodation and food services businesses had the highest approval rate for financing applications at 57%. Close behind were retail trade (55%) and healthcare (54%) businesses.

• On average, transportation and warehousing was the industry with the youngest businesses, which corresponds to the highest number of recent startups. Healthcare and social assistance had the oldest businesses, with an average age of 91 months (7.6 years).

“Demand for IT services increased during the pandemic, leading to improved financial performance,” Rohit Arora, CEO of Biz2Credit, said. “Accommodation and food businesses saw the highest average approval rates for financing requests. This accounted for the second largest percentage of the funding given to small businesses. These businesses suffered greatly during the pandemic and were able to take advantage of funding programs like the Paycheck Protection Program (PPP) that were set up to help them.”

Biz2Credit’s report also analyzed how frequently businesses in different industries worked with a certified professional accountant for financing applications. It examined the data of more than 40,000 small businesses that partnered with CPA firms to process and fund more than $1 billion in PPP loans through the CPA Business Funding Portal, a cloud-based financing platform developed by Biz2Credit and CPA.com specifically for accounting firms. The platform recently added a term loan option to support CPA firms’ expanding role in business advisory services. 

Data from the platform was analyzed as part of the Biz2Credit report. The top five industries working with CPA firms were accommodation and food services (17.8%), construction (13.6%), healthcare (13.3%), professional services (12.0%) and other services (9.5%), which includes beauty salons, repair shops and laundry services.

“We know from our experience with small business relief efforts during the pandemic that CPAs provide a critical bridge in securing funding for many business owners,” Erik Asgeirsson, president and CEO of CPA.com, said. “Getting CPA firms streamlined access to financing for their clients will have beneficial effects going forward but particularly so for industries faring less well as the recovery gains strength.”