How Has Small Business Lending Changed Since 2010? James Smith Used Data Analytics to Find Out — and Help Small Business Owners Get Loans

For years, James Smith worked in global sourcing for manufacturing brands like GE, Black & Decker, and Eaton. Shortly before leaving his last company, he noticed the firm beginning to look deeper not just into their business data, but also how they got it. It piqued his interest in data management.

Soon after this realization, the COVID-19 crisis hit. With more time on his hands, James decided it was the perfect chance to master new skills — and pursue a growing passion —  at GW Data Analytics Boot Camp.

Planting the seed

“Most large companies don’t do a good job of managing their data, especially on the sourcing side,” said James. “They have data and they use it to their benefit, but the time and energy they spend sourcing, optimizing, and generating results isn’t as efficient as it could be. It’s a common problem, and I saw it at my previous company. The best way for companies to improve data management is to adjust the way they collect their data in the first place.”

James’s fascination with data sourcing translated into a timely, powerful boot camp project centered around small business loans and the Small Business Administration (SBA). James found himself asking: How has the small business lending landscape changed in the last 10 years? What tools can I develop to help capital-seeking small business owners understand where they fit into the landscape? How can I enable them to find what they need more efficiently?

To answer these questions, he started with sourcing. 

Putting the foundation in place

By consolidating data from 2010 through the first quarter of 2020, James and team members Jessica Murillo, Pariya Poocharoen, and Kandra Romanowski set out to see how many SBA loans had been granted to small businesses across the country — and what those demographics looked like.

Through data sourced directly from the SBA, James was able to track trends surrounding how many loans had been granted, and to whom. He then broke the data down even further — determining how many small businesses are white-owned vs. Black-owned, male-owned vs. female-owned, and more.

“Generally speaking, the top five categories of small businesses receiving loans haven’t changed much over the years. Hotels, motels, restaurants, gas stations — these categories remain fairly constant,” said James. “But there are other, smaller sub-trends that are shifting, and we wanted to shine a light on those.”

Digging into the data, James pinpointed the following four trends:

• By and large, the biggest loans are lent by the SBA.
• The rate of small business lending increased year-over-year from 2010 before hitting a plateau in 2017. Then, it began to decline. 
• In 2020, small business lending spiked again. 
• At the start of 2020, loans were larger, with restaurants and individually owned hotels receiving the most money in funding.

“We uncovered a couple of reassuring insights,” said James. “One was that in the majority of areas, it’s not only the big cities giving out loans. Even small towns have banks that small business owners can go to with a good chance of receiving a loan — they just have to know they have access. Another was discovering the full extent of the SBA’s services. In addition to loans, they do consulting, helping small business owners put together business plans and the like. It felt good to walk away knowing the SBA does, in fact, do a lot for the industry.”

When consolidated, this data provided James and his team with the inputs they needed to bring their full project vision to life. So, they began building. 

Building the dashboard

The result was a comprehensive website featuring various data animations and an interactive dashboard that allows small business owners to select their state and town to see:

1. Which banks in the surrounding area have given out the most loans
2. Which banks have lent the highest sums of funding
3. What types of businesses tend to receive this funding

Small business owners can use the tool to seamlessly view and analyze lending trends in their area — leveraging the data to determine what type of loan they want, how much they should ask for, and who they should ask for it.

Presenting the final product

On behalf of his whole team, James presented the completed project at Demo Day — and received a whirlwind of positive feedback, with many attendees eager to learn more. But the way he sees it, Demo Day wasn’t the finish line.

“Since our initial dataset only included the first quarter of 2020, we couldn’t see the full impact of COVID-19 on small business lending trends,” said James. “So many small businesses have taken a beating. I’d like to do some updates and get the product up to speed so I can visualize more about what exactly has changed.”

Since Demo Day, James has been demonstrating his data wrangling, analytics, and Tableau skills to secure a role in the business analytics field. 

“I’ve really enjoyed the process,” he said. “I still have some work to do, but I always will — that’s the beauty of this industry.”

Looking to pursue a project you’re passionate about? Explore GW Boot Camps.