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Yahoo Finance Plus What is the average small business loan amount?
The average small business loan amount is $663,000. That’s according to the most recent data from the Federal Reserve released in 2017 and only includes commercial and industrial (C&I) loans. If you’re looking for a small business loan, there are more factors to consider, including alternative lending sources, eligibility requirements, and repayment terms.
To help you find the best small business loan for you, here’s an in-depth look at the average small business loan amounts.
Key small business loan statistics
According to the latest data from the Federal Reserve:
The average small business loan amount is $663,000
The average small business loan amount from large national banks is $593,000
The average small business loan amount from small national banks is $146,000
The average SBA loan is $107,000
Average SBA loan amounts
SBA loans are low-interest, government-backed loans offered by private lenders and backed by the Small Business Association. The SBA 7(a) loan is the most common type of SBA loan, which allows borrowers to take out up to $5 million dollars. SBA loan interest rates are typically lower than average small business interest rates, but like other business loans, other factors play a large part in the rate you receive, including your credit score, finances and time in business.
According to the Federal Reserve, small national banks had higher average loan amounts than large national banks.
Type of loan | Loan amount |
|---|---|
SBA loans from small national banks | $165,000 |
SBA loans from large national banks | $59,000 |
Overall average for SBA loans | $107,000 |
Average small business loan amount by lender
In addition to the type of business loan you take out, the amount you are able to borrow depends on the type of lender you choose. Large national and foreign banks lend more on average than smaller regional banks. Alternative lenders tend to offer a smaller range of loan amounts.
Lender | Average amount |
Large national banks | $593,000 |
Regional banks | $146,000 |
Foreign banks (made by U.S. branches) | $8,512,000 |
Bankrate insight
According to the 2021 Small Business Credit Survey, the percentage of small businesses that received all the funding they applied for declined sharply from 2018 and 2019 results. Make sure you know all your small business financing options to ensure you get the funding you need.
What are alternative lenders?
Alternative lenders are nontraditional finance companies, also known as online or fintech lenders. Alternative lenders can offer the same types of business loans as traditional banks and credit unions, like SBA loans, microloans and business lines of credit. But they may also provide alternative lending solutions not typically offered by traditional banks. This may include peer-to-peer business loans and crowdfunding platforms for businesses.
One of the main benefits of alternative lenders is they typically have more flexible qualifications and terms than traditional banks. This makes them a good fit for small business owners in underserved communities or anyone with bad credit who would have trouble securing financing from traditional banks.
But before applying for a small business loan from an alternative lender, there are a few disadvantages to consider. Compared to traditional banks, alternative lenders typically charge higher rates. They may also offer smaller loan amounts and shorter repayment terms.
Below are some of the top alternative small business lenders and their average loan amounts.
Lender | Average amount |
|---|---|
BlueVine | $25,000-$30,000 |
Credibly | $53,000-$56,000 |
Fundbox | $5,000-$40,000 |
OnDeck | $40,000 |
Bankrate insight
Lenders have been tightening their loan standards recently, making it harder for businesses to access credit, especially from traditional banks. Fortunately, there are alternative lenders, which typically have business loan requirements that are more flexible.
Where to find business loans
If you are looking for a smaller loan, a short-term loan from a smaller bank or alternative loan could be best for you. Alternative online lenders tend to offer better rates and more flexible terms. Online lenders are also more likely to have unique features and borrowing options such as business loans for bad credit and invoice factoring, which allow you to borrow against unpaid invoices.
If you want to take out an online loan, look for online lenders that offer business loans. For traditional bank loans, contact a bank you have an existing relationship with or consider opening an account, as some banks like Citi require you to maintain a business checking account if you want to take out a business loan.
If you want to apply for an SBA loan, start by completing the association’s Lender Match program. Before deciding on a lender, be sure to calculate your estimated monthly payments with a business loan calculator.
Bottom line
The average small business loan amount varies considerably depending on what type of loan you take out and what lender you choose. Borrowers looking for large sums and longer repayment terms are likely better off looking into SBA and large bank loans, while borrowers looking to cover smaller expenses should consider small banks or alternative loans.
Always compare interest rates, repayment terms, loan amounts, eligibility criteria and fees when selecting a loan to make sure you find the most affordable option for your circumstances.
