It may come as a surprise, but business startups skyrocketed during the pandemic. This makes bank statement loans for small-business owners more important than ever.
The COVID-19 pandemic brought countless hardships. Sickness and disease become all too common in America’s cities, suburbs, small towns, and rural areas. Families were changed, lifestyles were revised, and the economy felt a massive upheaval.
Much was written and debated about the economy and the impact of the virus. Most of the discussion, for good reason, was negative. Due to mandated closures, restricted travel, and countless small but impactful changes, the economy ground to a near stall.
But, in retrospect, there was a surprising trend during the pandemic. It was a trend that we are only now starting to understand. In fact, we’re only now seeing that this trend even occurred.
During the pandemic, there was a surge in the creation of businesses.
That’s right, 2020 was a banner year for creating new businesses.
Perhaps you were one of the inspired individuals who used the challenges of the COVID pandemic as a launch pad for your own business. Perhaps your income was threatened, you struggled with work, and finally decided to start the business you’ve always dreamed of.
And perhaps that business became a success.
Owning and operating your own business is incredibly rewarding, but it creates significant challenges. Actually operating and maintaining the business is challenging enough, but there are also challenges outside of work. For example, securing a mortgage can more difficult for people who don’t work a typical 40-hour, 5-days-a-week job.
Many business owners, therefore, need an alternative to the “traditional” mortgage. A banks statement loan for small-business owners is often the solution.
Starting Businesses During the Pandemic: Not as Uncommon as is Seems
If you started a business during the COVID pandemic, you might think you’re on your own. You might think, if you read much of the negative economic and financial news, that you are the only person to start a successful business in 2020 or 2021.
But that is not the case at all. In fact, you have thousands of colleagues who have also started successful businesses. Essentially, you’re not alone.
A report from the National Bureau of Economic Research says that while applications for new businesses fell in the early part of the pandemic (around March and April of 2020), they surged upward in the second half of the year. This surge, the report says, continued throughout 2021.
According to the report, the increase is highest among all years since these statistics have been logged. The earliest data is from 2004, which means 2020 was the top year for new businesses in 17 years of collected information.
New businesses sprouted from many different sectors, but it appears that non-store retail, professional services, scientific and technical work, and transportation were all among the top industries for new businesses. Also on the list, and somewhat of a surprise, is the fact that “accommodation and food services” was a major contributor for new businesses. (Perhaps this was because many restaurants or food-service companies closed and new ownership filled the void; just a thought.)
This growth in new businesses was so prevalent that it even got its own name. Through their research, this organization made discoveries on what they dubbed “the pandemic startup wave.” They estimate that over 4.3 million business applications were filed in 2020, an increase of 24% from the previous year. Each month, roughly 380 out of every 100,000 adults became a new entrepreneur. Retail trade, the sector with the highest gains, saw an increase of 58% compared to the previous year.
Who started these businesses? You might assume that new business owners are typically young adults, 20-somethings, fresh out of college with shiny new business degrees. However, the highest percentage was among 45 to 54 year olds, and people with less than a high school degree. They were often immigrants, latinos, and male, as well as non-veterans, according to the report.
Why does this matter? Sure, it’s interesting that many other people created small businesses during the pandemic, but what does that have to do with mortgage qualification? It’s important because, with so many small-business owners, the industry has had to make changes. While bank statement loans for small-business owners were, in previous years, a unique and uncommon mortgage, they are now fairly typical. There is now an established system for qualifying small-business owners, and it often starts with a bank statement loan.
Business Owners and the Challenges of Securing a Mortgage
Owning a business creates freedom, independence, and the chance to earn an income that is virtually unlimited. But there are challenges, including the challenge of securing a mortgage. Business owners don’t have the typical documents, such as paystubs, and tax returns may not accurately reflect their entire earnings and growth.
But there are solutions, including bank statement loans for small-business owners.
Bank Statement Loans for Small-Business Owners
With a bank statement loan, you are not using the traditional forms to qualify for a mortgage, but are instead using statements from your bank accounts. In many ways, bank account statements can create a more detailed picture of your economic position. They not only show your incomes, but they demonstrate your expenses and total savings. This can be vital information when you are applying for a mortgage.
Did you start a successful business during the pandemic? Are you now ready to purchase a home for yourself and your family? Contact our team today and let us help you find the right mortgage for your specific needs.
Bank statement loans are perfect for small-business owners, and we’d love to help you qualify for one of these helpful mortgages!