Owning a business can be expensive and unexpected expenses tend to arise. For small business owners who need additional funds, small business loans could be a great option. There are many factors to consider when choosing a small business lender, such as eligibility requirements, loan amount options, and repayment terms.
Small business owners can also take out loans from the United States Small Business Administration (SBA). The SBA helps small business owners obtain loans from traditional lenders and some non-traditional lenders. To decide which is right for you, consider the average loan amounts available for each type of small business loan and lender.
Key Small Business Loan Statistics
The average small business loan amount is $663,000, according to the latest data from the Federal Reserve. However, this average does not take into account the different types of loans and offers from lenders. Small business loans can range from $13,000 to $1.2 million. The average small business loan among alternative lenders ranges from $5,000 to $200,000, with an overall average of $80,000.
Average small business loan size by loan type
The right small business loan for you depends on the amount of money you want to borrow and the term that suits your needs. Some loans are better suited for large investments, while others are best used to meet short-term needs.
SBA loans are best suited for larger investments because borrowing limits are high and the SBA offers borrowers a variety of benefits, including flexible overhead requirements and lower down payments. The SBA works with bank lenders to offer loan programs, including the popular 7(a) loan program, which allows borrowers to take out up to $5 million.
Medium-term loans and short-term loans are usually offered by online alternative lenders and may be better suited to smaller, shorter-term needs. Mid-term loans have much higher borrowing limits than short-term loans, making them ideal for borrowers looking for a slightly larger sum.
|Type of loan||Average quantity|
|Short term loan||$20,000|
Average Small Business Loan Size by Lender
Besides the type of loan you take out, the amount you can borrow depends on the type of lender you choose. Large domestic and foreign banks lend more on average than small regional banks. Alternative lenders tend to offer a narrower range of loan amounts.
Loan amounts vary widely by loan type, making it crucial for small business owners to determine which type of lender is best for them.
According to the Federal Reserve, here are the average loan amounts by type of lender:
|Major National Banks||$593,000|
|Foreign banks (made by US branches)||$8,512,000|
|Alternative lenders||$50,000 to $80,000|
Who are the alternative lenders?
Alternative lenders are largely online lenders and have grown in popularity as an alternative to traditional bank lenders. Alternative lenders often have more flexible qualifications and terms, allowing borrowers with bad credit to take out loans they may not qualify for from a traditional lender. Online lenders tend to offer a smaller range of loans, usually between $5,000 and $200,000. However, the average ranges vary depending on the individual lender.
These lenders are best suited for short-term needs and small expenses. Alternative loans are also a great option for those who prefer an online experience. Below are some of the best alternative small business lenders and their average loan amounts.
|BlueVine||$25,000 to $30,000|
|Credible||$53,000 to $56,000|
|Checkout||$5,000 to $40,000|
|On the bridge||$40,000|
Where to find business loans
Small business loans vary widely by loan type and lender, so you’ll likely find the best option by shopping around before you apply. If you need more than $100,000, an SBA loan or a mid-term loan is probably your best option. SBA loans connect you with banks that are specifically looking to work with small businesses, and the SBA covers up to 85% of any loss in the event of default. SBA loans also offer competitive rates and generally have lower down payments.
If you are looking for a smaller loan for short-term expenses, a short-term loan from a small bank or an alternative loan might suit you best. 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 bad credit loans and invoice factoring, which allow you to borrow against unpaid invoices.
If you want to take out a loan online, look for online lenders that offer business loans. For traditional bank loans, contact a bank you have worked with before, as establishing a relationship may lead to better rates and terms. If you want to apply for an SBA loan, start by filling out the association’s form Lender Match program. Before choosing a lender, be sure to calculate your estimated monthly payment using a business loan calculator.
The average small business loan size varies greatly depending on the type of loan you take out and the lender you choose. Small business loans come in a variety of formats and features, including long-term business investments and payroll coverage when income is low. Borrowers looking for large sums and longer repayment terms are probably better off turning to SBA and large bank loans, while borrowers looking to cover smaller expenses should consider smaller banks or alternative loans. .
Always compare interest rates, repayment terms, loan amounts, eligibility criteria, fees, and other factors when selecting a loan to ensure you find the most affordable option. for your situation.