29 Eye-Opening SBA Lending Statistics (2024 Report)
You may be considering applying for an SBA loan as a small business owner. Before you do, it's important to let you know that the SBA lending statistics for 2023 are out, and there are some interesting changes from last year.
The notable change is the increase in the maximum loan amount and the SBA funding fee elimination for certain loans. This eye-opening report will save your business thousands of dollars and help you get the financing you need to grow and expand it. If you want to apply for an SBA business loan this year, these stats will give you a good idea of what to expect.
Key SBA Lending Statistics
- The average SBA loan size is $108,000.
- 90% of SBA loan applications are turned down.
- The average interest rate for SBA loans is 7.75%.
- The SBA's loan repayment terms typically range from 10 to 20 years.
- The SBA has a network of over 1,800 small business lending partners.
General SBA Lending Statistics
1. The SBA offers small businesses financing of up to $5 million.
(FRB)
These SBA small business loans can be used to launch your new company or franchise, buy an existing small business or equipment, stay afloat, help with operating expenses, or serve as working capital.
Despite not making direct loans to small business owners, the SBA helps by guaranteeing 50 to 90% of the loan from lenders like small banks and alternative lenders, reducing their risk.
Small companies have access to various lending programs designed to inspire people from all walks of life and professions to pursue the American Dream.
2. $108,000 is the average amount for SBA small business loans.
(SBA)
Many small businesses take out business and personal loans to survive, which is why nine million loans were given out in 2021. The sum of these small business loans was $764 billion. Additionally, 5.2 million business loans totaling over $669 billion were made available through the Paycheck Protection Program.
Here’s how to get a business loan in six easy steps. The ability of a small business to obtain financing may also depend on its cash flow and industry.
After all, many small businesses in the US operate in many industries, including retail, fitness, auto repair, and more. Small banks participating in the SBA lending program run a lot less risk when making SBA small business loans.
As a result, institutional lenders are inclined to ease their loan application process, as well as decrease loan rejections and the amount of their small business lending packages. We see that by the $108,000 average loan amount by the Small Business Administration.
3. In 2021, loans from the SBA totaled $44.8 billion.
(SBA)
Despite improvements to small business lending programs over the past few years, the SBA is mindful that some regions, like rural areas, still face difficult access to capital.
That’s why they prioritize small business loans to minorities like black-owned firms, women-owned small businesses, and historically underserved communities.
The SBA has made continuous progress in providing more finance to small business owners around the country, a priority under Guzman's direction. These SBA lending statistics demonstrate how important it is for the average small business owner to have access to capital.
Your business and personal credit score impact loan approval rates, if yours are low, read this article on how to build business credit fast.
4. The SBA was established officially in 1953.
(SBA)
The main purpose of the SBA was to help, consult, assist, and safeguard the interests of small business concerns, as well as ensure small businesses obtain a “fair amount” of government contracts, small business grants, and other sources of business finance.
Their website states that concern for small business lending stretches back to World War II when small businesses were left to struggle, and giant production organizations grew in response to wartime defense contracts.
As a result, Congress established the Smaller War Plants Corporation, allowing small businesses to participate in government contracts and get funding. Since its establishment, the SBA has expanded to provide numerous programs, including disaster relief, nationwide counseling and resources, and lending guarantees.
5. Nearly 52,000 loans for small businesses totaling more than $36.5 billion were made in 2021.
(SBA)
$11 billion in loans were given to small businesses owned by minorities. The number includes 30% of all SBA loans. According to the SBA, there are approximately 8 million minority-owned small businesses nationwide.
Minorities may not entirely own these companies, but at least 51% do. That figure has been rising, partly due to assistance from SBA-guaranteed loans.
Small business lending statistics show that women-owned small businesses made approximately $5 billion in the fiscal year 2021. The same year, the SBA loaned $1.2 billion to veteran-owned businesses.
Small business loan statistics also reveal that roughly 4,400 small businesses received microloan assistance totaling $71.8 million. 41% of those loans went to underserved populations, including Hispanic and black-owned businesses.
6. The SBA made over $1 billion in write-offs in 2021.
(FRB)
Small businesses get a certain amount of time to pay off loans from the SBA after defaulting. But occasionally, these small business loans fail, and the SBA writes them off (charges them).
As soon as the loans are deemed worthless, that system removes them from the SBA's balance sheet. However, this year's write-offs are still significantly less than the total write-offs for 2011, 2012, and 2013 ($2.37 billion, $2.32 billion, and $2.05 billion, respectively), but have increased from $808 million in 2018.
7. Most small business loans from the SBA go to full-service restaurants, with 28,680 being given out in just 2021 alone.
(FRB)
With 19,141 small business loans distributed, limited-service restaurant enterprises are in second place. This sector has the highest lending approval rates. The total amount of these enormous loans was $17.1 billion last year.
For comparison, the dental industry came in second place behind the limited and full-service restaurants sector with only 10,699 loans worth $6 billion.
Small businesses have expanded across a wide range of industries in recent years. Some industries have benefited because their enterprises obtain more investment than others since they are thought to be more profitable. The following are the top industries in 2021 for financing received:
- Selling Electronics
- Healthcare Services
- Dentistry
- App Development
- Manufacturing
- Creative/Marketing
- Hospitality
- Alcohol
- General Consulting
8. The SBA's loan repayment terms typically range from 10 to 20 years.
(SBA)
SBA loans often have 3 to 5-year repayment durations with balloon payment structures. Additionally, these loans are not available to at least 11 potentially legitimate industries, including gambling, government-owned, multi-sales distribution, lending loan packaging firms, multi-level marketing, real estate investment firms, lending, non-profit, and speculation-based industries.
Statistics on SBA Lending Programs
9. The average 7(a) loan amount in 2022 is $497,000.
(SBA)
The average lending amount increased by 3.4%. SBA 7(a) loans decreased by 2.5% in 2022 to just under 53,000. And the total value of all 7(a) loans decreased by 1.3% to $26.4 billion. The SBA lending statistics also report that the average interest rate for a 7(a) loan is 6.12%.
A 7(a) loan, which offers small business owners funds ranging from a few thousand dollars to $5 million, is the most well-known SBA loan type.
Qualified small businesses can use the money for various purposes, including startup costs, asset repairs, equipment purchases, land purchases, business expansion, debt refinancing, business acquisition, inventory and supply purchases, and more.
To be approved for funding, business owners must have good credit and successful business history. Borrowers will typically need to provide collateral to obtain finance. Repayment periods for most loans are typically no longer than ten years, and they are 25 years for real estate loans.
10. Guaranty fees for SBA 7(a) loans range from 2 to 3.5% of the loan's amount that is SBA-guaranteed.
(SBA)
That is typically around 75% of the total loan cost. No guarantee fee is charged for SBA 504 loans. However, lenders may impose a loan origination cost of up to 3.5% of the total loan amount. Packing, loan broker, appraisal, and business valuation fees are possible extra expenses.
Consider all of these charges when estimating how much capital you'll need in addition to your down payment if your lender wants to negotiate the closing costs; most lenders will include them in the Total Project Cost, so the borrower doesn't have to pay them out of pocket.
11. SBA Express Loans have a maximum funding amount of $350,000.
(SBA)
For those that require quicker funding, the SBA offers an Express Loan option due to the lengthy SBA 7(a) approval procedure. Similar to equipment loans, this type of funding includes stricter eligibility standards and marginally higher interest rates (the SBA guarantees almost half of these small business loans).
However, initial approval is achieved in a couple of days, and full funding is completed in only a few weeks. This loan's speed works well for firms that are already operational or are service-based businesses without a physical location. Funding a startup with a build-out will take longer than a few weeks.
12. The average SBA 504 loan amount is $2.1 million.
(SBA)
The median loan size increased by 5.1%. The 504 loans decreased by 4.6% in 2022 to just over 2,400. The average interest rate for a 504 loan is 5.39%, and the total value of all 504 loans decreased by 2.2% to $5.1 billion.
The SBA collaborated with certified development companies (CDC) to offer 504 Loans to support and promote economic development.
These loans must be used to finance fixed assets, such as buying existing buildings or constructing new ones, that are at least 51% owner-occupied and have 10- to 20-year repayment terms.
The SBA 504 Loan program can provide small businesses with the financing they require for long-term loans for fixed asset acquisitions, such as purchasing real estate, buildings, or large equipment.
According to SBA lending statistics, firms are often asked to guarantee at least 20% of the loan. The firms must also be valued at $15 million or less and have an average net income of $5 million over the past two years to be eligible for funding.
13. The number of SBA CAPLines loans decreased by 8% in 2021.
(SBA)
Businesses that want loans for working capital to meet seasonal financing obligations or address short-term cash flow issues might apply through the SBA CAPLines program.
According to the SBA, SBA CAPLines is an asset-based revolving line of credit. Together with 7(a) or 504 loans, four separate credit programs are covered under CAPLines.
These programs have extremely low-interest rates (5.75 to 8.25%) but only provide five-year repayment durations. CAPLine currently offers these four programs:
- CAPLine Financing for Working Capital: These funds can be used to meet your short-term working capital requirements. These funds cannot be used to pay taxes.
- CAPLine Contract funds: These are frequently used by contractors to finance particular contracts and their general administrative costs. These funds cannot be used for working capital loans, tax payments, debt financing, or the acquisition of assets.
- Seasonal CAPLine funds: Raise funding with this option if your company has to pay for goods or reduce large receivables during the year's busiest seasons. In some circumstances, you could also be able to use the money to cover seasonal increases in labor costs.
- CAPLine Funds for Builders: These can fund building and remodeling projects. Expenses that have been approved include, among other things, labor, supplies, equipment, landscaping, and utility connections.
Although the cost of these loans will vary depending on your financial circumstances, the lender you choose, and the amount you borrow, generally speaking, you can anticipate paying interest rates between 7.25% and 9.75%.
14. The SBA Export Loan offers up to $5 million in funding.
(SBA)
Owners of businesses that conduct worldwide business may be eligible for an SBA Export loan. Export loans are only offered to companies that have existed for more than a year and export goods.
The interest rates and repayment conditions can vary substantially for these types of loans. Under its Export Working Capital Program, the SBA also provides loans to businesses that require merchant cash advances on export orders, receivables, or letters of credit.
These loans are available to businesses even before they finalize an export deal. If accepted, you can use the money for working capital during protracted payback periods, the purchase of materials, inventories, and the creation of items for export. It can also be used to pay off international accounts receivable.
Speak with your lender or a dependable financial advisor if you're unclear about which program is appropriate for you.
15. SBA Microloans increased by 5.4% in 2022 to just over 8,700.
(SBA)
The average loan size increased by 2.3% to $13,000. The total value of all microloans increased by 8.4% to $113 million.
The SBA now offers a Microloan program in response to the growing market of home-based, freelance, and online business owners who frequently need less money to start or grow their companies.
Microloans can be utilized for most business needs, excluding paying off debts and buying real estate. In contrast to other SBA programs, Microloans are approved and originated by non-profit intermediary lenders but are supported by the SBA.
The SBA Microloan Program offers qualified small businesses funding ranging from $500 to $50,000. It was developed to aid minority, female, veteran, and low-income business owners. To obtain financing, borrowers must sign a personal guarantee and put up collateral.
16. SBA Disaster Loans increased by more than 400% in 2021.
(SBA)
Some businesses fail because of natural disasters – but we hope you never become a victim of one. The SBA assists in the form of Disaster loans if you do. Businesses showing evidence of the harm caused by a disaster may be eligible for up to $2 million in funding with interest rates as low as 4%.
When a disaster strikes, the SBA evaluates the damage to determine which companies qualify for reimbursement under the Disaster Loans program. Interest rates will not be higher than 4% for enterprises without access to financing elsewhere and 8% for those that do. Depending on the business's resources, repayment lengths may go up to 30 years.
17. Businesses accepted into the SBA's 8(a) Business Development program can obtain sole-source contracts from the government for up to $4 million.
(SBA)
The government aspires to award disadvantaged small business owners at least 5% of all federal contracting funds each year.
The SBA's 8(a) Business Development program is one of the tools they utilize to accomplish that goal. A socially or economically disadvantaged US citizen company owner must possess at least 51% of a small business to be eligible for 8(a) financing.
Owners must have a personal net worth of at least $250,000, less than $4 million in assets, and an average annual adjusted gross income of at least $250,000. Owners must also oversee daily operations, and their company must have a track record of success.
18. The SBA Community Advantage Program offers startups and existing businesses that want to grow up to $250,000 in funding.
(SBA)
The SBA introduced its Community Advantage Loans program in 2011, intending to assist companies that operate in underserved areas.
You can use money in various ways, including acquiring assets, paying for working capital expenses, etc. The repayment period for qualified enterprises is typically between seven and ten years, with interest, which often ranges between 7 and 9%.
19. 75% of the businesses hit hard by the pandemic in 2020 applied for government aid through the Paycheck Protection Program (PPP).
(FRB)
Nearly 90% of small businesses indicated a negative impact of the pandemic by the end of April 2020. Over 70% of businesses reported a drop in operating revenues throughout this time, over 40% reported temporary closures, and over 40% indicated supply chain issues.
These effects persisted for most of the second quarter of 2020 before progressively waning as the recovery took shape in the year's second half.
At the beginning of the pandemic, lending standards tightened, but loan demand decreased significantly due to the widespread use of PPP schemes. By deducting the federal funds rate by 50 basis points to a target range of 0 to 0.25% in March 2020, the Federal Reserve eased monetary policy.
Small business loan statistics show that lending conditions significantly tightened in Q2 and Q3 due to increased uncertainty regarding the pandemic's course and its impact on the economy.
Government support initiatives were essential in containing the crisis's economic effects. In 2020, government-backed finance for SMEs increased by an unprecedented amount.
Through August 2020, the PPP offered an additional 5.2 million forgiven debts totaling more than $525 billion. Since then, the program has been extended twice, with the last extension occurring in January 2021.
Statistics on Small Business Administration Loan Providers
20. A national bank is the number one place to get SBA loans if you're a highly qualified borrower.
(WestTown Bank Trust)
Working with a major national bank has benefits because of their expertise in loan processing. Large banks frequently have SBA-preferred lender designation and are well-versed in SBA lending.
Due to their enormous volume of transactions, small businesses can also afford to provide more affordable interest rates than their smaller counterparts.
Unlike small banks, big banks focus more on the data and less on the borrower. For instance, regardless of your prior expertise or past, you can be immediately denied a loan if you don't pass credit checks or fulfill the bank's strict requirements.
21. Credit unions tend to have the lowest SBA interest rates compared to other small business loan providers.
(Ondeck)
One benefit of dealing with a credit union for SBA lending is the personalized experience. Even if your credit history isn't great or you're new to an industry, you might still be approved for a loan.
That is similar to what smaller banks offer. Additionally, credit unions can approve loans more swiftly than traditional banks since their internal hierarchies are more straightforward.
According to small business lending statistics, a credit union isn't the best place to apply for SBA funding if you're looking to fund a very large project, perhaps one that would cost several million dollars.
22. Online lenders often charge higher interest rates to cover their investment in technology and online marketing.
(ValuePenguin)
They also have strict restrictions regarding personal credit scores and other quantitative eligibility conditions to ensure a quick application process and increased approval rates.
Online lenders are a terrific option for researching from the comfort of your home because the time and effort required to identify the best lending institution can be tiring.
Statistics on SBA Small Business Loan Approval Rates
23. 90% of SBA loan applications are turned down.
(Fundera)
Low approval rates for SBA funding for small businesses are due in part to the difficulty of navigating lender inconsistencies and completing various applications. The approval rate for people using an SBA consulting service is significantly higher.
Finding a small business with years of expertise that you can trust and that will reimburse your consulting cost if your loan is rejected is the secret. Check out these small business loans you can get with no credit checks if you’re part of the 90%.
24. The SBA stipulates in its credit standards that a debt service credit ratio of at least 1.15 must be met for all loans over $350,000.
(The Guardian)
The SBA determines DSCR as Operating Cash Flow/Debt Service, even though certain banks use somewhat different methods. For already-existing small businesses, this is computed based on historical data, while for new businesses, it’s forecasted.
25. Small businesses in rural areas have a far higher chance of getting approved for SBA loans than urban small businesses.
(SBA)
Small banks provide funding to 62% of small businesses in rural areas. In urban regions, 53% of small businesses applied for SBA loans from larger banks and 43% from smaller banks.
In the past year, 49% of small businesses applied for finance through a loan from a small business lender.
Usually, only 38% of urban small businesses receive all the capital they ask for, compared to a high approval rate of 51% for rural small businesses.
26. A United States citizen must possess at least 51% of the company to get approved for SBA lending.
(SBA)
The SBA will allow financing for small businesses with foreign investors, but non-citizen ownership is limited to a maximum of 49%.
27. Only franchises listed in the SBA Franchise Directory will be considered for SBA loan approval.
(SBA)
Aspiring franchise owners may apply to the SBA for financial help. Franchise small business owners may apply for approval if their name is not already on the list, but individual borrowers won't be accepted until the franchise is included.
28. 4,975 lenders approved PPP loans totaling over $342 billion to over 1.6 million small businesses.
(FORA Financial)
The SBA released a 2020 report that included new data on the authorized PPP loans. That translates to more than 160,000 applications being approved daily, or more than $34 billion in loan proceeds if weekends are excluded.
That’s a decent approval rate, perfect for Hispanic and black-owned businesses normally turned down for traditional loans because of few personal assets, no collateral to put up, and too much debt.
The statistics show that the average small business loan size authorized by the PPP was $206,000. That suggests that if each application asked for the maximum amount, the average applicant's monthly payroll expenses would have been around $82,400.
29. A criminal conviction within the past six months makes you ineligible for SBA small business loans.
(Small Business Trends)
The SBA promotes members of underrepresented groups to take advantage of unique funding and business contract possibilities. It invites aspiring small business owners from all walks of life.
Some personal or commercial reasons will prevent small businesses from receiving loan approval, even if the business owner's background normally doesn't negatively affect the business loan approval rate. Anyone who satisfies even one of these criteria won't be given a loan:
- Serving a probationary period following a conviction.
- Awaiting the outcome of ongoing legal actions, such as divorce, lawsuits, and criminal prosecutions.
- Not an American citizen or holder of a Green Card.
- Starting an unqualified business.
SBA Lending FAQ
If you intend to apply for an SBA small business loan, you should attempt to have a credit score of at least 690 or better.
If your score is between 690 and 720, your chances of getting a loan are decent, and if it is 720 or more, your chances are excellent.
Even though it's not impossible, getting an SBA loan with a score below 690 will be more difficult.
It all depends on the lender type. Many lenders, especially alternative lenders and merchant cash advances, will want at least a 20% down payment for franchises or already-existing small businesses and about 30% for most new ventures.
The average startup takes 90 to 120 days, and the average small business that’s already established takes 90 days. The length of the SBA application process depends on a variety of reasons.
The loan type, the type of business (startup vs. established), site search, lender type, and time required for lender underwriting are all elements that will affect the entire timeline.
The capacity for companies to complete the necessary paperwork and meet the bank's standards will also significantly impact if the small businesses fail to get funding or succeed.
The SBA mandates that banks evaluate the loans as though there is no government support to participate in the lending program.
That indicates that they want the collateral requirements for an average SBA loan to be the same as for a non-SBA small business loan. The government support from the SBA does give the bank additional security, but it cannot be utilized as collateral.
Yes, one of the forms needed to apply for an SBA small business loan is a business plan. A business plan is a fantastic exercise for you as a business owner and the most useful resource for a lender when assessing your loan application.
You must show that you can pay back the loan to be approved for an SBA small business loan.
To do so, you'll need to submit a sizable quantity of paperwork, and you'll also need to patiently wait while the SBA and its partners complete your application. You can anticipate the following business loan eligibility requirements and also having to submit documents and complete forms like these:
– Federal personal tax forms
– Federal business tax forms
– Profit & loss statements
– Balance sheets
– Your resume or CV
– Business debt information
– Project-specific information
– AR / AP agings
– Forms about your business and its history
– Statement of personal history
Grow Your Business With SBA Loans
Now that you're familiar with all the ins and outs of SBA lending statistics, what are you planning to do? If you're a small business owner looking to apply for SBA funding, use the above data to guide your choices.
These stats can help increase your chances of getting at least some of the money you require to buy the new equipment, finish your project, or hire the needed skillful individuals. Do you know what else can increase your chances of getting approved for a loan?
If you answered “having a website,” you’d be right. A website helps increase your online visibility, branding, and credibility. Consider using the best website builder from this list to build one for yourself if you don’t have one yet:
- Squarespace is an AI-powered website builder that guides you through site creation. You’ll have a professional-looking site in less than 10 minutes!
- Wix comes on this list because it allows you to integrate your site with hundreds of other apps, like social listening tools and scheduling software, to name a few. Wix plans come with a 14-day free trial and a free domain.
- Web.com is the most straightforward and affordable website builder on this list. This builder doesn’t offer a plethora of features. However, if you’re looking for a simple-looking site with a drag-and-drop interface, this option is for you.
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Martin Luenendonk
Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.
This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.