From Bankrate By Raija Haughn

Owning a business can be costly, and unexpected expenses tend to come up. For small business owners in need of extra funds, small business loans could be a great option. There are many factors to consider when choosing a small business loan lender, such as eligibility requirements, loan amount options, and repayment terms.

Small business owners can also take out loans through the US Small Business Administration (SBA). The SBA helps small business owners get loans from traditional and some untraditional lenders. To decide what is right for you, consider the average loan amounts available for each type of small business loan and lender.

Key small business loan statistics

According to the latest data from the Federal Reserve:

  • The average small business loan amount is $663,00
  • The average small business loan amount from alternative lenders is $80,000
  • Small business loans can range from $13,000 to $1.2 million
  • Alternative lender small business loans range from $5,000 to $200,000

This average does not account for varying loan types and lender offerings.

Average small business loan amount by loan type

The right small business loan for you depends on how much money you want to borrow and the term length that fits your needs. Some loans are better for large investments, while others are best used for accommodating short-term needs.

SBA loans are best suited for larger investments since 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 typically offered by alternative, online lenders and may be better suited for smaller, more short-term needs. Medium-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 amount
SBA loans $107,000
Medium-term loans $110,000
Short-term loans $20,000

Average small business loan amount by lender

In addition to the type of loan you take out, the amount you are able to borrow depends on the type of lender you choose. Large national and foreign banks lend more on average than smaller regional banks. Alternative lenders tend to offer a smaller range of loan amounts.

Loan amounts vary significantly by loan type, making it crucial that small business owners consider which type of lender works best for them.

According to the Federal Reserve, these are the average loan amounts by lender type:

Lender Average amount
Large national banks $593,000
Regional banks $146,000
Foreign banks (made by U.S. branches) $8,512,000
Alternative lenders $50,000-$80,000

What are alternative lenders?

Alternative lenders are largely online lenders and have gained significant 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 with a traditional lender. Online lenders tend to offer a smaller range of loans, typically between $5,000 and $200,000. However, average ranges vary depending on the individual lender.

These lenders are best suited for short-term needs and smaller expenses. Alternative loans are also a great option for those who prefer an online experience. Below are some of the top alternative small business lenders and their average loan amounts.

Lender Average amount
BlueVine $25,000-$30,000
Credibly $53,000-$56,000
Fundbox $5,000-$40,000
OnDeck $40,000

Where to find business loans

Small business loans vary greatly by loan type and lender, so you will likely find the best option by shopping around before you apply. If you need more than $100,000, an SBA loan or medium-term loan is likely your best option. SBA loans connect you with banks specifically looking to work with small businesses, and the SBA covers up to 85 percent of any loss in case of default. SBA loans also offer competitive rates and typically have lower down payments.

If you are looking for a smaller loan for short-term expenses, a short-term loan from a smaller bank or alternative loan could be best for you. 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 loans for bad credit and invoice factoring, which allow you to borrow against unpaid invoices.

If you want to take out an online loan, look for online lenders that offer business loans. For traditional bank loans, contact a bank you have previously worked with because building a relationship can lead to better rates and terms. If you want to apply for an SBA loan, start by completing the association’s Lender Match program. Before deciding on a lender, be sure to calculate your estimated monthly payments with a business loan calculator.

Bottom Line

The average small business loan amount varies considerably depending on what type of loan you take out and what lender you choose. Small business loans have a variety of formats and features, including long-term business investments and covering payroll when income is low. Borrowers looking for large sums and longer repayment terms are likely better off looking into SBA and large bank loans, while borrowers looking to cover smaller expenses should consider small banks or alternative loans.

Always compare interest rates, repayment terms, loan amounts, eligibility criteria, fees, and other factors when selecting a loan to make sure you find the most affordable option for your circumstances.