Average Small Business Loan Amount: Outlined and Defined

Wondering how your funding needs stack up against those of business owners across the U.S.?

We’ve gathered average small business loan amounts from various lenders and loan types to assist you in estimating the financing you could potentially qualify for as a small business owner.

Did you know that as of the most recent Federal Reserve Banks’ Survey of Terms Lending data in 2017, the average commercial and industrial (C&I) loan amounted to $663,000? However, the Federal Reserve noted in December 2021 that C&I loan balances had decreased by 18.6% compared to the third quarter of 2020, despite a nearly 10% rise in new loans.

Finding updated information on the average small business loan amount can be challenging, especially from reputable sources like the Federal Reserve Banks. However, it’s important to note that the average loan size varies significantly depending on the lender and the type of loan.

Understanding what lenders typically consider can help you navigate how to secure a small business loan and determine which types may be most suitable for your needs.

Let’s explore the average small business loan amounts available from banks and online lenders, including iBusinessLender’s lending partners.

Large National Banks: $593,000

Banks are often seen as the premier choice for business financing due to their ability to offer competitive rates, extended repayment terms, and substantial average loan amounts. According to the most recent Federal Reserve Banks’ data from 2017, large banks issued an average business loan amount of $593,000.

However, large banks typically avoid smaller loan commitments because lower principal amounts result in less interest earned. Moreover, banks tend to be risk-averse, preferring to partner with established large corporations rather than smaller businesses.

As a result, banks may not be suitable for every business owner. If you require modest loan amounts or your credit profile does not align with a bank’s stringent requirements, exploring other lender options may be necessary.

Related: Bad Credit Business Loans? These Are Your 5 Best Options

Small Domestic Banks: $146,000

Smaller banks, including regional banks and credit unions, often have limited financial resources compared to large national banks. Consequently, they struggle to offer multimillion-dollar loans, resulting in smaller average small business loan amounts compared to their larger counterparts.

According to Federal Reserve data, the average small business loan amount from smaller banks was $146,000, which is significantly less—nearly $450,000—than that offered by larger banks. Smaller banks are cautious about the risk of debt charge-offs associated with larger loans, making them more inclined to finance smaller-scale projects.

Despite their lower loan amounts, regional banks and credit unions maintain stringent qualification requirements for borrowers. Small business owners seeking funding for less capital-intensive ventures may find these institutions to be viable options. However, those working to enhance their financial standing may need to explore alternative avenues for financing.

Lenders of SBA Loans: $107,000

Based on the latest Federal Reserve data, the average loan amount for all types of loans backed by the Small Business Administration (SBA) was $107,000.

Although the SBA does not directly lend money, it provides guarantees to partner lenders for loans made to small businesses that may not qualify for conventional bank funding. This guarantee reduces the risk for lenders, making it easier for borrowers to secure financing.

Here are the average SBA loan amounts offered by each type of institution:

PPP Loans: Less than $95,000

When the COVID-19 pandemic surged across the U.S. in spring 2020, the SBA Paycheck Protection Program (PPP) offered financial support to businesses, providing working capital for expenses such as payroll. These loans were intended to support the country during the economic downturn, particularly aiding businesses deemed “non-essential” that had to temporarily close or reduce operations to combat the spread of COVID-19.

According to the SBA, the average size of a PPP loan was less than $95,000.

SBA Loans Issued by Large Banks: $59,000

You might question why the average SBA loan amount of $59,000 is significantly lower than the average small business loan amount of $107,000 typically offered by large banks. The reason is that, outside of pandemic times, larger banks primarily concentrate on providing conventional bank loans.

According to Federal Reserve data from 2017, SBA-backed loans accounted for only 0.1% of the total value of all bank loans issued by large banks.

SBA Loans Issued by Small Banks: $165,000

Smaller banks typically don’t have the capacity to take on the risk associated with multimillion-dollar loans. However, with the government guaranteeing a portion of SBA loans, it reduces their risk exposure, enabling them to approve higher loan amounts, typically averaging around $165,000 for small businesses.

In fact, small banks collectively provide more than double the total value of SBA loans compared to large banks. If you’re seeking an SBA loan, beginning your lender search at a regional bank can be advantageous.

Related: Here Are 10 of the Best SBA Lenders for Small Business Financing

Alternative Lenders: $37,258

Alternative lenders evaluate your business’s comprehensive financial condition to determine your eligibility for funding. This approach makes them more inclined to support younger and smaller businesses.

Consequently, the average loan amount provided by online alternative lenders is generally lower. For instance, in 2021, the average small business loan amount across all financing offered by iBusinessLender’s partner lenders was $37,258.

While businesses with substantial annual revenues may still qualify for loans in the seven-figure range, the interest rates and repayment terms will typically differ from those offered by large banks.

There are alternative ways to finance your small business.

The following options are alternatives to traditional term loans and are provided by numerous online lenders. While these funding types may not feature the low interest rates of bank loans or SBA-backed programs, they offer flexible terms and are accessible options for businesses with poor credit.

Here are the maximum average loan amounts available for these popular alternative financing options:

Business Line of Credit: $22,000

Rather than receiving a lump sum, a business line of credit provides ongoing access to a revolving pool of funds, ensuring you have the cash flow necessary to operate your business smoothly.

With a business line of credit, you can withdraw funds as needed and repay them, allowing you to borrow again when necessary.

While banks extend larger credit lines to eligible borrowers, online lenders accommodate businesses that may not qualify for substantial amounts, albeit typically offering lower credit limits. According to Fundera, the average loan amount for a business line of credit is $22,000.

Short-Term Loans: $20,000

Short-term loans are favored by businesses with limited credit histories or lower credit scores.

They provide a quick infusion of working capital, making them a suitable funding option. On average, businesses obtain around $20,000 through this type of financing.

Longer Term Loans: $110,000

Longer-term loans, also known as medium-term loans, are frequently sought by business owners who prefer spreading payments over a longer period, usually ranging from 2 to 5 years. These funds are commonly used for purchasing equipment, refinancing debt, or funding renovation projects.

Term loans typically provide higher funding amounts, extended repayment periods, and lower interest rates compared to other financing options.

The average small business loan amount for longer-term loans is reportedly $110,000.

Equipment Financing: Up to 100% of Value

When acquiring new equipment, the focus should not solely be on the average small business loan amount, but rather on securing the maximum business loan amount suitable for your needs. Equipment financing evaluates your ability to secure funding alongside the value of the equipment you intend to purchase.

For instance, if you apply for $50,000 in commercial truck financing as a qualified borrower, you would likely receive the full $50,000 loan amount.

However, depending on the equipment’s lifespan and other factors, you may be required to make a down payment. It’s advisable to discuss potential upfront costs with your lender during the application process.

Invoice Financing: Up to 80%-90% of Receivables

With accounts receivable (or invoice financing), lenders typically give you up to 80%-90% of the outstanding invoices you wish to finance. The amount of funding you get correlates with the value of what’s already owed to you.

Get Your Business Loan Options in Minutes

Now that you have an understanding of various maximum small business loan amounts, it’s time to evaluate your own circumstances.

If you’re applying for a long-term bank loan or an SBA loan, you’ll need to draft a detailed loan request letter outlining the amount you require, why it’s necessary, and other details to demonstrate your creditworthiness.

Considering alternative financing for your small business? Let one of our expert Business Advisors assist you in navigating the process and connecting you with a reputable lender.

Utilize our small business loan calculators to estimate your anticipated payments.

If you require funding beyond the average small business loan amount, explore the available options to fully support your business’s success.