October 17, 2023
I have often wondered if there is an objective way to find and define low risk businesses, but most lists you find online point to side hustles that are low risk because of the size and scope of the business, not because the business or industry itself is low risk. Of course if you make cupcakes for family members and friends as a side hustle that is pretty low risk from a business perspective, but I wanted to find a way to define risk based on data.
Fortunately, the SBA publishes all of the SBA loan data including data on which loans default. So we took all of the SBA loan data over the last 30 years, organized it by industry, and then sorted it by default rate percentage to come up with a list of the top 49 lowest risk small businesses.
If an SBA loan defaulted, that means that some portion of the loan was charged off by the lender, in other words not repaid. Here is the list:
I was surprised to see that self storage businesses were the lowest risk business based on having the lowest SBA loan default rate over the years at less than 1%.
Now as you scroll through the list you will see that the default rates go up to 13.71% which might seem pretty high, but many of the riskiest industries have default rates that exceed 25%!
If you want to dig through the SBA loan data yourself, make sure you check out our SBA Loan Data Analyzer.