Average Small Business Loan Amount: Outlined and Defined
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How do your funding needs compare with those of business owners throughout the U.S?
We’ve compiled every average small business loan amount by lender and loan type to help you gauge the amount of financing you might nab as a small business owner.
Average Business Loan Amount by Lender
There’s no one answer when you’re asking “What is a typical small business loan amount?” It varies by lender. But learning what lenders look for is a good starting point in deciding how to get a small business loan and what types might work best for you.
Specific lenders have different resources and goals for their loan programs. As such, your lender might decline your application simply because you’re asking for too much or too little.
Let’s take a look at the typical business loan amount you’ll find from large and small banks.
Large National Banks: $593,000
Banks are considered the gold standard in business financing. They can offer some of the best rates, long repayment terms and high average business loan amounts. The average business loan amount issued by large banks was $593,000 in 2017 according to the Federal Reserve.
Large banks generally shy away from smaller commitments as lower principals accrue less interest. Banks are also risk-averse, preferring to work with large established corporations over smaller ones.
For this reason, they’re not the right fit for every business owner. If you’re looking for modest loan amounts or your credit profile doesn’t meet a bank’s strict requirements, you’ll need to look elsewhere.
Small Domestic Banks: $146,000
Smaller banks (such as regional banks and credit unions) tend to have less money by nature. This makes it difficult for them to offer the multimillion-dollar loans that large national banks can and naturally makes their small business loan average amount less than that of large national banks.
To be precise, according to the Federal Reserve data, the average small business loan amount was $146,000 — nearly $450,000 less than larger banks. The risk of debt charge off on larger loans is too significant for smaller, regional banks. In turn, these lending institutions are a good source for small business owners looking to fund less capital-intensive projects.
Despite the lower dollar amounts, qualification requirements for loans issued by regional banks and credit unions are strict. Business owners working to improve their financial profile may have to consider alternative routes to financing.
Lenders of SBA Loans: $107,000
The average small business loan amount for all types of loans backed by the Small Business Administration (SBA) was $107,000 in 2017, according to Federal Reserve data.
While the SBA isn’t a lender, if your small business isn’t able to qualify for conventional bank funding, this government agency will guarantee a portion of your loan offered through a partner lender. This makes it less risky for lenders to approve borrowers.
Here are the average business loan amounts for SBA loans offered by large and small banks.
SBA Loans Issued by Large Banks: $59,000
You might realize that $59,000 is sharply lower than the typical business loan amount of $107,000 for all SBA loans and wonder why considering large banks generally service larger loans. However, larger banks generally focus on offering conventional bank loans.
Of the inventory of loans large banks provided in 2017, 0.1% of the value of all large bank loans were SBA loans, according to Federal Reserve data.
SBA Loans Issued by Small Banks: $165,000
Smaller banks don’t usually have the opportunity to take a risk on multimillion-dollar loans. With the government guaranteeing a portion of SBA loans, however, it lessens their risk and makes it worth offering more high-figure approvals, with typical small business loan amounts of $165,000.
Small banks also provide more than double the total value of SBA loans compared with large banks. If you’re looking for an SBA loan, start your search for a lender at a regional bank.
Alternative Lenders: $29,277
Alternative lenders look at your business’s overall financial health to assess your fundability.
This means they’re more likely to work with younger, smaller businesses.
As a result, the average small business loan amount offered through online alternative lenders is typically lower. In 2019, the average small business loan amount for all financing offered through Fast Capital 360’s partner lenders was $29,277.
Qualified borrowers with high annual revenues can still receive seven-figure loans, but the interest rates and repayment structure will be different from what large banks offer.
Related ArticlesHere's more info from our experts to help your small business thrive.
Average Business Loan Amount by Alternative Funding Type
There are other options you can use to fund your small business besides banks and other lenders.
The following are alternatives to term loans and are offered by many online lenders. These funding types may not share the same low interest rates offered by banks or the SBA, but they have flexible terms and are options for businesses with bad credit.
Business Line of Credit: $17,892
Instead of a one-time lump sum, a business line of credit gives you access to a revolving amount of funding to provide the cash flow you need to run your business.
With a business line of credit, you withdraw and use funding as needed. You pay back what you borrow, and then take out additional funds when you need them.
Banks do offer higher lines of credit to qualified borrowers, but online lenders approve businesses unable to qualify for those high limits, albeit at a considerably lower amount. The average business loan amount for a line of credit offered by Fast Capital 360’s alternative lenders was nearly $17,900 for 2019.
Merchant Cash Advance: $32,084
Although not a loan, merchant cash advances (MCAs) are a popular choice among businesses with a limited credit history or a bad credit score.
MCA providers advance you working capital that’s repaid with a percentage of your future sales. Payments are taken out from credit card transactions or ACH draws until you’ve paid in full.
These are great short-term funding options if you’re looking for an infusion of working capital. The average MCA amount offered through Fast Capital 360’s lending partners was $32,084 in 2019.
Equipment Financing: Up to 100% of Value
If you’re in the market for new equipment, it isn’t the average small business loan amount but the maximum business loan amount you should consider. Instead of basing the total amount off of what you’re qualified to receive, equipment financing considers your fundability alongside the value of what you want to purchase.
For example, a qualified borrower applying for $50,000 in commercial truck financing would likely be given a loan for the full $50,000.
Depending on the equipment’s longevity, however, you could be required to submit a down payment. Check with your lender during the application process to learn what you could be on the hook for up front.
Invoice Financing: Up to 80% of Receivables
With accounts receivable (or invoice financing), lenders typically give you up to 80% 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.
Think about it like getting an advance when you need working capital and don’t have time to wait for your customers to pay up.
Applying for Your Small Business Loan
Now that you have an idea of various average small business loan amounts, it’s time to assess your own situation.
If you’re applying for a long-term bank or SBA loan, you’ll need to draft a loan request letter detailing how much you need, why you need it and other information to prove your fundability.
If you think an alternative loan would be a better fit for your small business, one of our expert Business Advisors will guide you through how the process works and match you with a top lender.
If you’re wondering how different rates and repayment terms are affected by your potential business loan amount, our small business loan calculators can help you get a better idea of what’s in store for you as you apply. And if you need to borrow more than the average small business loan amount, see what options are available to fully fund your business’s success.