Across all banks in the U.S., the average small business loan amount is $633,000, according to the latest data from the Federal Reserve. This number is useful to get an idea of how much business funding you might be able to get, but it also leaves a lot out. What about the average small business loan amount for SBA loans? And alternative lenders?
The average small business loan amount across the board is a hard number to calculate—there are so many lending institutions that offer so many different forms of funding that an overall average small business amount isn’t necessarily a helpful number.
When you look at the average business loan amount across types of loans, lending institutions, and lenders, though, things will start to make more sense. We’ve compiled the average small business loan amount based on types of loans, the type of lending institution, and the specific lender in question. So, let’s dig into the numbers of how much funding business loans typically offer small businesses.
As we’ve mentioned, some loans are better suited for larger investments in your business, and some are meant for smaller, shorter-term needs.
And as such, there are varying small business loan amount averages based on the type of loan itself.
Here’s the breakdown of the average small business loan amounts by loan type:
SBA loans are loans that are issued by banks, but guaranteed by the Small Business Administration. Structured as lump sum loans, SBA loans are large loans best for financing major business endeavors. The SBA offers loans through different loan programs, the most popular of which are the 7(a) loan program and the microloan program, and the typical loan amount that SBA loans come in will vary based on which program it comes from.
That said, the average small business loan amount for all loans backed by the SBA in 2017 was $107,000.
Medium-term loans are structured like bank loans but are offered by non-bank, alternative lenders. These loans are typically large, lump sum loans that extend over a fairly long term. Term loans are best when you have a one-off business need to accomplish.
The average small business loan amount for term loans is around $110,000.
Short-term loans are like medium-term loans but shorter and smaller. Short-term loans are more accessible than longer-term loans, and they’re better for smaller one-off endeavors for your business. The average small business loan amount for short-term loans is around $20,000.
Depending on the line of credit lender you’re working with, business lines of credit can either offer small amounts of funding or very large. While banks are the more traditional line of credit lenders (offering larger amounts of these small business loans), non-bank, online lenders now offer smaller lines of credit that are much more accessible. While not an industry standard, we often refer to these types of lines of credit as “short-term lines of credit.” The average small business loan amount for shorter-term lines of credit is around $22,000.
Invoice financing is a specific type of financing that gives you cash for your outstanding invoices. With invoice financing, a financing company advances you a lump sum of capital based on the value of the invoice—typically up to 85% of the invoice value.
Based on the structure of this type of financing, it’s hard to nail down an average small business loan amount for invoice factoring. The loan amount fully depends on the value of the specific business’s unpaid invoices.
Another specific type of financing is equipment financing. Equipment loans help you pay for the pricey equipment and machinery your business needs to run.
Equipment financiers offer up to 100% of the value of the equipment in a loan, which you’ll pay back over a set period of time with interest.
Like invoice financing, equipment financing amounts fully depend on the value of the specific equipment being financed.
The average business loan amount also varies greatly by the type of lending institution that you’re getting a loan from.
Each lending institution—from large banks, community banks, to alternative lenders—fulfill a certain type of small business’s need for funding with their loans.
Some offer large loans, and only large loans, while some having varying amounts depending on the small business owner’s needs.
Here’s a breakdown of the average small business loan amounts in 2017, by lending institution, based on the most recent data from the Federal Reserve.
The average small business loan amount for large, national banks in 2017 was around $564,000.
This loan size is, obviously, very big.
It’s much bigger than what most small business owners would qualify for. And in general, bank loans have very stringent qualification standards that most small business owners can’t meet.
That’s partly because banks require very strong credit scores, established businesses, and strong financials. However, small business owners also have a hard time qualifying for bank loans because of the average small business loan amount at banks.
Most banks only consider applications for loan amounts much bigger than what small business owners typically request.
Well, it comes down to the fact that the bank incurs the same cost servicing a loan of $50,000 or $750,000. The difference is that the bank makes way more money on the $750,000 loan than they do on a $50,000.
For that reason, the average small business loan amount at large national banks is high, and small business owners have a hard time qualifying for a loan of that size.
Smaller banks, either on the national level or the regional level, tend to offer smaller average loan amounts than large, national banks do.
The average small business loan amount at small banks in 2017 was around $184,000.
While this is much lower than what large national banks offer, this is still often much more than what small business owners can qualify for. The same issue of loan size versus loan cost applied for smaller banks here, too.
Alternative lenders, on the other hand, offer a variety of different types of loan products.
Generally speaking, these loan products are smaller than what you’d find at the SBA or with traditional banks. This is not to say that alternative lenders don’t have high maximum amounts—they do offer loans up to $1 million—but borrowers on average qualify for less.
The average small business loan amount across alternative lenders is around $80,000.
Now that you have an understanding of the average loan amount across specific loan types, and across different lending institutions, it’s time for the third view: small business loan amounts by alternative lender.
Based on the lender you’re interested in, what’s their average small business loan amount?
Here’s a breakdown for the top lender in each category.
Another popular alternative to a medium-term loan is a short-term loan, when you don’t necessarily qualify for medium-term loans or you need a smaller amount of capital.
Here’s how their average small business loan amounts breakdown:
Another popular financing method among small business owners is a line of credit. Again, these loans vary in size based on the lender you’re working with.