Average Small Business Loan Amount in 2019
The Average Small Business Loan Amounts by Lender and Loan Type
The average small business loan amount last year was $633,000. However, this number stretches across all banks in the United States. Although this might hint at the maximum loan amount your small business can receive, it doesn’t indicate the average small business loan amount for different types of loans or from different types of lenders.
In this article, we’ll use data from the Federal Reserve to give you a sense of what the average loan amount is for various types of small business loans, and from different types of lenders. This will help you get a better sense of what amount you may be able to borrow to meet your small business needs.
Average Small Business Loan by Loan Type
Whatever your business plans are, you’ll find a loan type that meets your needs, but the average small business loan amount changes depending on the loan type. Here are the average small business loan amounts by loan type, according to the Federal Reserve:
- SBA loans: SBA loans are issued by banks, but guaranteed by the Small Business Administration (SBA). Structured as lump-sum loans, many SBA loans are large loans best used for financing major business endeavors. In 2016, the average SBA 7(a) loan was $417,316 while the average SBA microloan in 2017 was approximately $13,000.
- Term loans: These are larger, lump-sum loans with repayment structured over a long period of time. They can come from national banks or alternative lenders. The average small business loan amount for term loans was around $110,000 last year.
- Short-term loans: These are structured like long-term loans but the repayment is over a shorter period of time. The average short-term small business loan last year was $20,000.
- Business lines of credit: These types of loans can be either large or small, depending on the lender. Although banks are the more traditional line of credit lenders, online lenders offer smaller lines of credit that are much more accessible. The average small business loan amount for shorter-term lines of credit was around $22,000 in 2018, and will be similar this year.
Average Size of Small Business Loans by Lender Type
When looking for the best small business loans, you’ll probably look at three lender types: SBA, banks, and alternative lenders. We discussed the average SBA loan amount above. Here are the average small business loan values given by banks and alternative lenders:
- Banks: On average, national and foreign banks lent larger amounts to businesses than small national and regional banks in 2018 and are poised to do so again in 2019. This makes sense as these banks have more capital to work with. For large national banks, the average small business loan amount was $593,000, while the average amount lent by regional banks was $146,000. So, if you’re looking for a larger small business loan with a longer term, applying to a national bank like Wells Fargo or Chase might be the way to go. On the other hand, if your needs aren’t as great, or if you’re looking for a shorter-term loan, your local or regional bank might offer you better terms. Either way, make sure you’re fully prepared with the financials you need to complete the paperwork for a small business bank loan.
- Alternative Lenders: Small business owners who haven’t been traditionally served by banks can now go online to find funding from alternative lenders. Online lenders typically lend smaller amounts than a bank would, with average loans ranging from $5,000 to $200,000. In 2019, the average small business loan from alternative lenders is expected to be between $50,000 and $80,000. Do your research to determine what amount and terms best meet your business needs before exploring your options online, since there are a number of loan types available from different lenders.
Wondering “Where Should I Look for a Small Business Loan?”
Small business owners looking for a loan should consider a variety of funding sources since shopping around will help you get the best deal. For loans of $100,000 or more, bank and SBA loans are probably your best options as they fund at that level and can offer good rates. Contact a bank or credit union that you've previously worked with since building a relationship there will mean better terms and rates later on.
You should consider a loan from an alternative lender, a small local bank, or a nonprofit lender for loans under $100,000 since many larger banks don’t generally offer such small loans. While alternative lenders have higher APRs on average, you can still find reasonable terms if you have a good to excellent personal credit score. Finally, if you need $50,000 or less, you should consider applying for a microloan through the SBA or a nonprofit microfinance organization because they provide the best options in this range if you qualify.
No matter what small business loan amount you’re looking for, and no matter which loan and lender type work best for you, understand that loans for startup businesses are hard to come by. You’ll have much more success in looking for a loan to sustain or expand an existing small business. Also, keep in mind the six major steps you should follow through the loan application process to ensure things go smoothly.