Despite a record-breaking $1.2 trillion in small business loans being deployed in 2023, revealing a resilient post-pandemic recovery, the lending landscape is a story of stark contrasts, where surging fintech approvals and robust community bank support clash with persistent funding gaps and sobering denial rates for minority and women entrepreneurs.
Key Takeaways
- In 2023, U.S. small businesses received $1.2 trillion in total loans, marking a 5.2% increase from 2022 driven by post-pandemic recovery.
- Community banks provided 22% of small business loans in 2023, totaling $265 billion across 1.2 million loans.
- Fintech lenders originated $45 billion in small business loans in 2023, a 28% year-over-year growth rate.
- In 2023, 42% of small business loan applications were approved by traditional banks.
- Fintech approval rates for small business loans averaged 58% in 2023, vs 35% for banks.
- Black-owned small businesses faced 61% denial rates in 2023 SBA applications.
- 55% of U.S. small businesses are owned by minorities, yet they receive only 12% of loans.
- Women entrepreneurs owned 44% of small businesses but got 28% of loan dollars in 2023.
- 32% of small business loans went to firms aged 0-2 years in 2023.
- Average small business loan interest rate was 7.8% in Q4 2023 for banks.
- SBA 7(a) loans averaged 9.5% variable rates in FY2023.
- Fintech small business loans charged average 12.4% APR in 2023.
- 65% of small business loans led to job creation averaging 2.3 jobs per loan in 2023.
- Delinquency rates on small business loans rose to 1.8% in Q4 2023.
- SBA-backed loans had 89% survival rate after 5 years for recipients in 2023 data.
Small business lending grew significantly in 2023, but approval gaps persisted for many entrepreneurs.
Approval and Rejection Rates
- In 2023, 42% of small business loan applications were approved by traditional banks.
- Fintech approval rates for small business loans averaged 58% in 2023, vs 35% for banks.
- Black-owned small businesses faced 61% denial rates in 2023 SBA applications.
- 28% of small business loan denials in 2023 cited insufficient collateral.
- Women-owned firms saw 51% approval rate for SBA 7(a) loans in FY2023.
- Average small business loan rejection rate was 39% across lenders in Q3 2023.
- Veteran-owned businesses had 55% approval for community bank loans in 2023.
- 67% of small businesses with FICO scores above 700 were approved in 2023.
- Rural small businesses experienced 45% denial rates from big banks in 2023.
- SBA Express loans had 72% approval rate, processing 25,000 approvals in FY2023.
- 33% of applications under $50k were denied due to credit history in 2023.
- Hispanic-owned SMBs saw 48% approval for microloans in 2023.
- Overall small business lending approval rate dipped to 41% in late 2023 amid rate hikes.
- Small business loan approval rates averaged 45% in 2022 Federal Reserve survey.
- 52% approval for loans under $100k by community banks in 2022.
- Denial rates peaked at 44% for startups in 2022 lending cycle.
- SBA microloan approvals hit 78% for eligible applicants in FY2022.
- 37% of SMB loan apps rejected due to weak cash flow in 2022.
- Asian-owned businesses had 59% SBA approval rates in FY2022.
- Big bank denial rates for SMBs reached 41% in H2 2022.
- Online lender approvals averaged 62% for repeat borrowers in 2022.
- 29% denial rate linked to personal credit scores below 680 in 2022.
- Rural approval rates lagged at 38% vs urban 47% in 2022.
Approval and Rejection Rates Interpretation
The lending landscape for small businesses is a patchwork quilt of opportunity, stubbornly stitched together by factors like credit scores and collateral, yet tragically full of holes when it comes to race, location, and whether you've ever taken a business loan out before.
Borrower Demographics
- 55% of U.S. small businesses are owned by minorities, yet they receive only 12% of loans.
- Women entrepreneurs owned 44% of small businesses but got 28% of loan dollars in 2023.
- 32% of small business loans went to firms aged 0-2 years in 2023.
- Black-owned businesses comprised 13% of applicants but 8% of approvals in FY2023 SBA.
- Rural small businesses, 19% of total, received 14% of lending volume in 2023.
- Veteran-owned SMBs, 10% of businesses, secured 7% of SBA loans in FY2023.
- Firms in retail sector, 22% of SMBs, got 18% of loans in 2023.
- Hispanic-owned businesses averaged loan sizes 15% smaller than white-owned in 2023.
- 25-34 year old entrepreneurs received 19% of small business loans in 2023.
- Tech startups, 8% of SMBs, captured 22% of fintech lending in 2023.
- Manufacturing SMBs, 12% of total, borrowed 16% of total funds in 2023.
- Average age of small business loan recipients was 12 years in 2023.
- LGBTQ+-owned firms, 5% of SMBs, received 4% of community bank loans.
- Food service businesses, 15% of applicants, had highest demographic diversity in 2023.
- 46% of small businesses are minority-owned, receiving 10% of loans in 2022.
- Female-owned SMBs, 42%, secured 26% of loan funding in 2022.
- Construction firms, 11% of SMBs, borrowed 14% in 2022 dollars.
- Firms under 5 years old got 28% of fintech loans in 2022.
- Black entrepreneurs faced 20% smaller average loan sizes in 2022.
- Healthcare SMBs, 9% total, received 12% lending share in 2022.
- Average SMB borrower age 45, with 68% having college degrees in 2022.
- Veteran SMB owners, 9%, got 6.5% of bank loans in 2022.
- Services sector dominated with 31% of loan recipients in 2022.
Borrower Demographics Interpretation
The data paints a picture of a financial landscape where opportunity is systematically distributed more like a curated privilege than a level playing field, consistently favoring established, tech-adjacent, and traditionally represented groups over everyone else.
Impact and Performance
- 65% of small business loans led to job creation averaging 2.3 jobs per loan in 2023.
- Delinquency rates on small business loans rose to 1.8% in Q4 2023.
- SBA-backed loans had 89% survival rate after 5 years for recipients in 2023 data.
- Small business lending contributed $450 billion to GDP growth in 2023.
- 72% of funded SMBs expanded operations within 12 months post-loan in 2023.
- Charge-off rates for SMB loans were 1.2% across banks in 2023.
- Minority borrowers' firms grew revenue 18% faster post-SBA loan in 2023.
- Rural SMBs created 1.5 million jobs via loans in 2023.
- Fintech loans had 2.1% default rate vs 0.9% for banks in 2023.
- 81% of small businesses reported improved cash flow after term loan in 2023 survey.
- SBA 7(a) loans generated $10 return per $1 invested in FY2023.
- Small business loan-funded expansions added 4.2% to employment growth in 2023.
- Women-owned firms post-loan saw 25% revenue increase on average in 2023.
- Net charge-offs on SMB credit cards reached $3.2 billion in 2023.
- 68% of loan recipients invested in technology upgrades in 2023.
- Veteran SMBs post-loan hired 15% more veterans in 2023.
- SMB loans spurred 3.1 million jobs in 2022 per SBA analysis.
- Delinquencies held at 1.4% for bank SMB portfolios in 2022.
- 85% 3-year survival for SBA loan recipients in 2022 cohort.
- Lending added $400 billion to SMB GDP contribution in 2022.
- 70% of borrowers expanded staff post-loan in 2022 survey.
- Charge-offs minimal at 0.8% for prime SMB loans 2022.
- Post-loan revenue growth 22% for minority SMBs in 2022.
- Rural jobs from loans: 1.2 million in 2022 USDA data.
- Fintech defaults higher at 1.9% vs traditional 0.7% 2022.
- 79% improved profitability after SBA funding in 2022.
Impact and Performance Interpretation
The engine of Main Street America is clearly purring—creating jobs, boosting revenues, and proving its resilience—despite the occasional sputter of delinquencies and the need for a tighter grip on the wheel with newer, faster lenders.
Loan Terms and Costs
- Average small business loan interest rate was 7.8% in Q4 2023 for banks.
- SBA 7(a) loans averaged 9.5% variable rates in FY2023.
- Fintech small business loans charged average 12.4% APR in 2023.
- Average loan term for small business term loans was 48 months in 2023.
- Fees on small business loans averaged 2.5% of loan amount in 2023.
- Lines of credit for SMBs had average rates of 8.2% in 2023.
- Microloan average rate was 8.1%, with max term 6 years in FY2023.
- Equipment financing loans cost 6.9% on average for SMBs in 2023.
- SBA 504 loans fixed rates averaged 5.2% for 20-year terms in 2023.
- Merchant cash advances had effective APRs up to 45% for small businesses in 2023.
- Average origination fee for bank SMB loans was 1.8% in 2023.
- Invoice factoring rates averaged 2.5% discount for 30-day terms in 2023.
- Small business loans under $100k had average 10.2% rates in 2023.
- Community banks offered lowest average SMB rates at 6.5% in 2023.
- Average bank SMB loan rate 6.2% amid Fed hikes in 2022.
- SBA 7(a) max rates hit 11.25% variable in late 2022.
- Term loans averaged 42 months duration for SMBs in 2022.
- MCA factor rates averaged 1.35 for small businesses in 2022.
- Credit line rates rose to 7.5% average in 2022.
- Equipment loans fixed at 5.8% for 60-month terms in 2022.
- Guarantee fees on SBA loans averaged 2-3.75% in FY2022.
- Factoring fees dropped to 1.9% for SMB invoices in 2022.
- Loans over $500k had lower rates at 7.1% avg in 2022.
- Community bank rates undercut big banks by 1.2% in 2022.
- Microloans cost avg 7.9%, terms up to 72 months in 2022.
Loan Terms and Costs Interpretation
Amidst the daunting terrain of small business financing in 2023, the data reveals a clear map: the safer your route (like an SBA 504 loan at 5.2%), the longer and more stable your journey, while the desperate shortcuts (like a merchant cash advance at up to 45%) can financially sink you before you even get started.
Market Size and Growth
- In 2023, U.S. small businesses received $1.2 trillion in total loans, marking a 5.2% increase from 2022 driven by post-pandemic recovery.
- Community banks provided 22% of small business loans in 2023, totaling $265 billion across 1.2 million loans.
- Fintech lenders originated $45 billion in small business loans in 2023, a 28% year-over-year growth rate.
- SBA 7(a) program approved $29.3 billion in loans to 57,000 small businesses in FY2023.
- Total small business credit outstanding reached $1.5 trillion by Q4 2023, up 4.8% from prior year.
- Online lenders disbursed 15% of small business loans in 2023, amounting to $180 billion.
- Big banks issued $450 billion in small business loans in 2023, down 2% from 2022 peak.
- Microloans under SBA program totaled $52 million to 2,300 businesses in FY2023.
- Small business lending by credit unions grew 7.3% to $112 billion in 2023.
- Non-bank lenders captured 18% market share in small business lending, $216 billion in 2023.
- Small business loan originations hit 12.5 million in 2023, up 6% YoY.
- SBA 504 loans approved $6.2 billion for 1,800 real estate projects in FY2023.
- Venture debt for small businesses reached $8.5 billion in 2023, 15% growth.
- Regional banks lent $320 billion to small firms in 2023, stable from 2022.
- Paycheck Protection Program remnants added $10 billion to small business lending in early 2023.
- Small business lending apps processed 45 million applications in 2023, approval volume $950 billion.
- Invoice financing for SMBs grew to $75 billion in 2023, 22% increase.
- In 2022, small business lending volume surged 12% to $1.1 trillion amid economic rebound.
- Credit unions' small business loan portfolios grew 8.1% to $120 billion by end-2022.
- SBA disaster loans disbursed $4.5 billion to 45,000 small businesses in FY2022.
- Alternative lenders provided $150 billion, 14% of market, in 2022 SMB loans.
- Bank small business loan growth slowed to 3.4% in 2022 after PPP wind-down.
- 11.8 million small business loans originated in 2022, average size $95,000.
- Fintech SMB lending tripled to $50 billion from 2020 levels by 2022.
- SBA 504 program funded $7.1 billion for 2,100 projects in FY2022.
- Total outstanding SMB debt hit $1.4 trillion by Q4 2022.
- Community development financial institutions lent $2.8 billion to underserved SMBs in 2022.
Market Size and Growth Interpretation
Despite the glitzy fintechs sprinting ahead at a 28% clip and the resilient community banks still quietly powering Main Street, the sobering reality is that over $1.5 trillion in total debt now sits on the books of small businesses, proving that recovery is just a fancy word for taking on a whole lot of responsibility.
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