While securing a small business loan might feel like a high-stakes gamble, the reality is that over $27.5 billion was approved through the SBA's 7(a) program alone in 2022, revealing a vast financial landscape where understanding the statistics—from approval rates to average loan sizes—is your most powerful tool for success.
Key Takeaways
- In 2022, the SBA's 7(a) loan program approved over 60,000 loans totaling $27.5 billion
- Total small business lending by U.S. banks reached $675 billion in 2023
- Community banks provided 20% of small business loans in 2022 despite holding only 14% of assets
- Small business loan approvals averaged 50.3% in 2022
- Black-owned businesses faced 68% loan denial rates in 2023
- Women-owned firms had 18% higher denial rates than men-owned in 2022
- Average SBA 7(a) loan size was $500,000 in FY2022
- Median small business bank loan was $150,000 in 2023
- SBA Microloans averaged $14,000 per loan in 2022
- 55% of small business borrowers are aged 40-59
- 42% of small business owners are first-time borrowers in 2023
- Women own 36% of small employer firms applying for loans
- SBA 7(a) loans had a 1.4% default rate in FY2022
- Small business loan delinquency rate was 1.2% in Q4 2023
- 85% of SBA Microloans were repaid on time in 2022
Small business loans remain crucial, supporting billions in funding for jobs and growth.
Approval and Denial Rates
- Small business loan approvals averaged 50.3% in 2022
- Black-owned businesses faced 68% loan denial rates in 2023
- Women-owned firms had 18% higher denial rates than men-owned in 2022
- 23% of small business loan applications were denied by banks in 2023
- SBA 7(a) approval rate was 62% for FY2022 applications
- Fintech denial rates for small loans were 45% in 2022
- Rural small businesses saw 28% denial rates vs 20% urban in 2023
- Startups under 2 years old had 71% denial rates in 2022
- Credit score below 680 led to 60% denial rate for SBA loans
- Latino-owned businesses denial rate at 56% in 2023 survey
- 35% of small firms deterred from applying due to fear of denial in 2022
- Big banks denied 25% of small business apps vs 15% community banks
- Pandemic-era denial rates dropped to 18% in 2021
- 15% of small businesses used loans for expansion in 2023
- Native American-owned firms denial rate 65% in 2022
- 40% denial for loans under $50k by fintechs
Approval and Denial Rates Interpretation
While the overall lending landscape appears cautiously open, a closer look reveals a stubbornly exclusive club where your odds of approval are dramatically reshaped by race, gender, location, and the age of your business, suggesting that for many entrepreneurs, the biggest hurdle isn't their idea but their identity.
Borrower Demographics
- 55% of small business borrowers are aged 40-59
- 42% of small business owners are first-time borrowers in 2023
- Women own 36% of small employer firms applying for loans
- Black entrepreneurs represent 12% of small business loan applicants
- 28% of small businesses are Hispanic-owned seeking financing
- Rural small business owners average 15 years in business
- 65% of small business loans go to firms with 1-19 employees
- Millennial owners (under 40) comprise 20% of borrowers
- Veteran-owned businesses received 5% of SBA loans in 2022
- Industry breakdown: 25% retail, 20% services for loan applicants
- 70% of small business owners have college degrees
- Self-employed individuals dominate 80% of micro-business loans
- Asian-owned firms 10% of SBA 8(a) program participants
- Average borrower credit score for bank loans is 720 FICO
- 55% male-owned small businesses get loans
Borrower Demographics Interpretation
While a seasoned core of forty- and fifty-somethings holds the fort, a fresh wave of first-timers, women, and diverse entrepreneurs is knocking loudly on the funding door, armed with degrees and grit, but the path to capital still shows the stubborn fingerprints of traditional barriers.
Interest Rates and Costs
- Interest rates averaged 6-8% for fixed SBA 7(a) in 2023
- Average APR on small business credit cards 20.5% in 2023
- SBA Express loans max rate prime + 4.5% + 2% for Express
- Online lenders charged 15-50% APR on average in 2022
- Bank term loan rates 5-10% for qualified borrowers 2023
- SBA 504 fixed rates averaged 4.2% for 20-year debentures 2023
- Factor rates on merchant cash advances 1.2-1.5x principal
- Community bank small loan rates 1% lower than big banks
- Prepayment penalties up to 5% on SBA loans in first 3 years
- Effective cost of SBA guarantee fees 2-3.75% upfront
- Variable rates tied to prime at 8.5% max spread for SBA 7(a)
- Invoice factoring fees average 2-5% per month
Interest Rates and Costs Interpretation
For a small business, navigating the world of financing is a stark choice between securing a sensible loan with an affordable rate, or desperately grabbing a financial life raft that will mercilessly inflate and then sink your already leaking boat.
Loan Characteristics
- Average SBA 7(a) loan size was $500,000 in FY2022
- Median small business bank loan was $150,000 in 2023
- SBA Microloans averaged $14,000 per loan in 2022
- Average term for SBA 7(a) loans is 10 years for real estate, 7 years equipment
- 45% of small business loans were under $100,000 in 2022
- Average interest rate on SBA 7(a) variable loans was 9.5% in 2023
- Fintech small business loans averaged $45,000 with 18-month terms
- SBA 504 loans average $1.2 million for fixed assets
- 60% of small loans were lines of credit vs term loans in 2023
- Average SBA disaster home loan was $130,000 in 2022
- Collateral required for loans over $50,000 in SBA 7(a)
- Average online lender loan term is 24 months in 2023
- SBA CAPLines average $250,000 for seasonal needs
- 30% of small business loans secured by real estate in 2022
- Average guarantee fee on SBA 7(a) loans is 3% for loans over $1M
- Average SBA 504 loan size $1.1M in 2023
- 25% of loans for working capital needs
Loan Characteristics Interpretation
While businesses may dream in millions, their financial reality is a tapestry of modest lifelines, where the typical borrower is navigating a $150,000 median loan with nearly half of all loans being for under six figures.
Market Size and Volume
- In 2022, the SBA's 7(a) loan program approved over 60,000 loans totaling $27.5 billion
- Total small business lending by U.S. banks reached $675 billion in 2023
- Community banks provided 20% of small business loans in 2022 despite holding only 14% of assets
- Fintech lenders originated $6.8 billion in small business loans in 2022
- SBA Express loans totaled $1.2 billion in FY2022
- Nonbank lenders accounted for 38% of small business loan dollars in 2021
- U.S. small business debt outstanding was $1.4 trillion in Q4 2023
- Paycheck Protection Program disbursed $800 billion to 11.5 million small businesses during COVID-19
- Microloans from SBA intermediaries totaled $55 million in FY2022
- Online lenders grew small business loan originations by 25% YoY in 2022
- Large banks issued 52% of small dollar loans under $100k in 2022
- SBA 504 loans funded 7,200 projects worth $7.6 billion in FY2022
- Small business loan volume increased 12% in 2023 per Equifax data
- CDFIs provided $2.1 billion in small business financing in 2022
- Venture debt to small businesses reached $15 billion in 2023
- SBA loan guaranty purchases hit $10 billion in FY2022
- Small business credit card debt totaled $150 billion in 2023
- Alternative lenders issued 1.2 million small business loans in 2022
- Bank small business loan portfolios grew 5% YoY in Q3 2023
- SBA disaster loans approved $47 billion since 2020
- In 2022, SBA 7(a) loans supported 1.2 million jobs
- Small business loans prevented 10 million job losses via PPP
- CDFI small business loans created 50,000 jobs in 2022
Market Size and Volume Interpretation
While traditional banks still dominate small business lending with nearly $700 billion in loans, a quiet revolution is unfolding as fintechs, community banks, and CDFIs carve out crucial niches, proving that when it comes to funding American dreams, there is finally more than one door to knock on.
Performance and Outcomes
- SBA 7(a) loans had a 1.4% default rate in FY2022
- Small business loan delinquency rate was 1.2% in Q4 2023
- 85% of SBA Microloans were repaid on time in 2022
- Fintech small business loans had 8% charge-off rate in 2022
- COVID PPP loans had 5% fraud rate per audits
- Small firms with loans grew employment 12% faster than non-borrowers
- SBA 504 loans default rate under 2% historically
- 75% of loan-funded businesses survived 5 years post-loan
- Bank small business loan net charge-offs at 0.9% in 2023
- Loan recipients saw 15% revenue growth vs 8% non-recipients
- 90% satisfaction rate among SBA loan recipients in 2022 survey
- Disaster loan recovery rate 95% for physical damage loans
- Fintech charge-offs dropped to 6% in 2023
Performance and Outcomes Interpretation
While traditional lenders and the SBA boast impressively low default rates and high satisfaction, painting a picture of responsible, job-creating stability, the data also tells a story of fintech's volatile adolescence and the lingering, costly fraud of pandemic-era programs.
Sources & References
- Reference 1SBAsba.govVisit source
- Reference 2FEDERALRESERVEfederalreserve.govVisit source
- Reference 3ICBAicba.orgVisit source
- Reference 4FREDfred.stlouisfed.orgVisit source
- Reference 5KAUFFMANkauffman.orgVisit source
- Reference 6EQUIFAXequifax.comVisit source
- Reference 7CDFIFUNDcdfifund.govVisit source
- Reference 8NVBnvb.comVisit source
- Reference 9LENDACADEMYlendacademy.comVisit source
- Reference 10ABAaba.comVisit source