Low Risk Businesses - Top 49 Small Businesses

October 17, 2023

Adam Hoeksema

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:

Industry Rankings

Rank Industry # of Loans Approved Average Loan Amount Default Rate
1 Self Storage 1619 $1,284,076 0.93%
2 Breweries 4475 $444,440 3.35%
3 Veterinary Services 10191 $580,353 3.62%
4 Funeral Homes and Funeral Services 3130 $757,488 3.74%
5 Offices of Dentists 24604 $438,156 4.24%
6 Offices of Mental Health Practitioners (except Physicians) 2061 $186,643 5.34%
7 Pharmacies and Drug Stores 6616 $452,467 5.41%
8 Offices of Physical, Occupational and Speech Therapists, and Audiologists 5049 $211,587 5.62%
9 Real Estate Investors 4821 $636,418 5.75%
10 Hotels (except Casino Hotels) and Motels 16571 $1,571,781 5.76%
11 Nursing Homes / Assisted Living 4507 $787,396 5.88%
12 Offices of Physicians, Mental Health Specialists 1423 $232,458 6.32%
13 Offices of Physicians (except Mental Health Specialists) 25845 $311,355 6.41%
14 Airbnbs, Short Term Rentals 1185 $539,302 7.34%
15 Offices of Lawyers 13499 $177,132 7.68%
16 Pet Care (except Veterinary) Services 4837 $309,169 8.10%
17 Insurance Agencies and Brokerages 10490 $266,464 8.46%
18 Home Health Care Services 7627 $320,883 8.50%
19 Food Trucks 1936 $99,238 8.83%
20 Beer, Wine, and Liquor Stores 14350 $370,497 9.03%
21 Offices of Certified Public Accountants 6729 $241,152 9.09%
22 Farming 8794 $352,603 9.73%
23 Equipment Rental 8604 $326,987 9.90%
24 Child Day Care Services 18478 $455,990 10.32%
25 Wholesalers 11408 $254,987 11.18%
26 Offices of Chiropractors 15555 $148,974 11.21%
27 Landscaping Services 18572 $144,281 11.48%
28 Personal Trainers 3466 $259,628 11.48%
29 Car Washes 7708 $738,972 11.52%
30 Plumbing, Heating, and Air-Conditioning Contractors 13358 $228,347 11.61%
31 Ecommerce 4621 $247,489 11.69%
32 Trucking, Long-Distance 17203 $142,294 11.83%
33 Bars 9409 $264,830 11.94%
34 Laundromats 6350 $320,784 12.02%
35 Manufacturing 95992 $385,099 12.10%
36 Couriers 1797 $262,903 12.47%
37 Roofing Contractors 4171 $216,783 12.51%
38 Private Schools 7892 $275,397 12.61%
39 Software Publishers 2099 $201,657 12.72%
40 Gasoline Stations with Convenience Stores 17009 $713,302 12.86%

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.

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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