According to the Small Business Administration, there are over 32.5 million small businesses in the US.
Just 20% of them have employees.
Globally, it’s estimated there are over 332 million small businesses!
Small businesses are a fundamental part of every economy regardless of where they are based.
However, running a small business isn’t easy.
Finance is a necessary evil, as the following small business lending statistics show.
Key Statistics
- 89.5% of small loans are issued by large banks
- 33% of small businesses fail due to insufficient capital
- Approximately 48% of US small businesses have sufficient finance
- 70% of US small businesses have debt
- 62% of small business loans are to keep the business going
- Small business loan interest rates range between 2.54% and 7.01%
- 43% of small businesses applied for a loan during 2020
- 32% of small businesses apply to non-bank lenders
- 51% of small rural businesses have loan requests approved
- Only 16% of small business loans are received by women
- 15% of small business loans go to the construction industry
- The majority of small businesses are self-financed
- 85% of merchant cash advances are approved
- 36% of loan denials are due to a poor credit score
- 33% of small business start with less than $5,000
- 95% of business loans have fixed interest rates
- 67% of small business have identified lending scams
Top Small Business Lending Statistics in 2025
1. 89.5% Of Small Loans Are Issued By Large Banks
Many small businesses are keen to do business with other local businesses.
In effect, they support each other and make it easier for small businesses to survive.
However, this isn’t the case when it comes to getting a loan.
According to the most recent reports, 89.5% of small loans, that’s those under $100,000, given to small businesses, are issued by the large, non-local banks.
The simple issue is that small businesses often don’t have the collateral or sufficient accounts to meet the approval of banks.
As many as 51% of small business loan applications, completed by small businesses at a local bank, are rejected.
That means less than half of the applications are approved.
Surprisingly, despite 89.5% of loans being issued by large banks, the approval rate for a small business at a large bank is just 25%.
(Zippia)
2. 33% Of Small Businesses Fail Due To Insufficient Capital
It can be extremely difficult for a small business to raise the capital it needs to survive.
Small banks are extremely cautious about lending to small businesses. They see them as a high risk.
The average small business loan is $417,316. Banks won’t lend more than $5 million to a small business.
However, despite these promising figures, and the fact that 14 million loans were issued in 2020, the truth is that 33% of small businesses fail because they don’t have enough money.
It seems likely that these are in the fifty-one percent of small businesses which don’t qualify for a loan.
You should note, the survival rate for a small business actually decreases as the years pass.
In year one is as low as a 21.9% failure rate. By year ten it reaches a failure rate of 65.7%.
(Zippia)
3. Approximately 48% Of US Small Businesses Have Sufficient Finance
According to the latest statistics, only 20% of small businesses get the finance they need through a small business loan.
The rest need to find alternate ways to obtain finance or the business is likely to go under.
The figures show that just 48% of US small businesses have enough funds to survive.
That means, with just 20% approved for loans, a further 28% are finding enough funding a different way.
In some cases, the business may simply be successful enough that alternate financing isn’t required.
Of the 52% that don’t have their financial needs met, some have partial finance, and others have too much debt to qualify for finance.
These are the businesses which are likely to end up failing.
That’s unless they can convince family, friends, or other people to invest in them.
(Zippia)
4. 70% Of US Small Businesses Have Debt
Most businesses need some sort of finance to get off the ground. The aim is to become profitable and eliminate the finance.
However, the truth is that this doesn’t always work. Currently, around 70% of small businesses in the US have outstanding debt.
According to the latest figures, 38% of those in debt owe less than $100,000. In business terms that’s a comparatively small loan amount.
In fact, 17% of small businesses owe less than $25,000.
The other 21% of those with debts under $100,000 owe more than $25,000.
While 30% of US small businesses have no debt, 13% have outstanding debt between $100,000 and $250,000.
A further 13% owe between $250,000 and $1 million.
That leaves 6% of small b businesses owing over $1 million. That’s probably enough to keep you awake at night.
(Zippia)
5. 62% Of Small Business Loans Are To Keep The Business Going
Small business loans are taken out when a business is created.
These loans are designed to give the business the capital it needs to become established and start making a profit.
In many cases, the loan will cover startup and running costs for 2-3 years.
After that, finance is generally seen as a necessity to help businesses expand.
Unfortunately, the global pandemic was hard for many small businesses.
It changed the face of small business lending.
Today, as many as 62% of small business loans are taken out to help businesses keep trading.
Just 38% of approved small business loans are to help businesses expand.
Of course, taking out loans simply to stay afloat means the business will be under a great deal of pressure to succeed.
It’s likely that this will lead to an increase in the number of failed businesses in the future.
(Zippia)
6. Small Business Loan Interest Rates Range Between 2.54% And 7.01%
Small businesses generally have higher loan rates than personal loans.
That’s because small b businesses often don’t have anything to secure the loan against, making them a higher risk for non-payment.
Despite this, a business owner with a good credit rating can still get business loans with interest rates between 2.54% and 7.01%.
Owners with less-than-stellar credit ratings may find that their loans will cost them significantly more.
According to the latest research, depending on the type of loan and the lender, the rate can be as high as 45%.
That’s when you need to be certain that it’s worth staying in business.
A loan with a 45% interest rate can create a significant drain on business finances.
It should be noted that the federal funds rate has risen several times in 2023, loan interest rates tend to rise when they do.
On average, a bank business loan will offer interest rates between 5.75% and 12%. Online business loans have a slightly higher rate, between 7% and 60%!
Business lines of credit attract interest rates between 8% and 60% and bad credit business loans generally have interest rates between 25% and 99%.
In short, choose your loan wisely.
(Zippia)
7. 43% Of Small Businesses Applied For A Loan During 2020
2020 was a tough year for most businesses. A few, such as Amazon and similar well-established online businesses, flourished.
For many, it was a time to claim PPP from the government, try to maintain staff levels, and find alternate ways of offering goods and services.
Many businesses struggled financially, which is why 43% of all small businesses in the US applied for finance in 2020.
The majority of loans were to help deal with the effects of Covid.
Unfortunately, 9% of those who applied didn’t receive any finance. The survey found that 14% received some finance, and the remaining 20% got the finance they needed.
The question is, how many of these small businesses will survive long enough to repay the loan?
It’s worth noting that small banks approve 19% of loans and non-banks approve 24.7% of loan applications.
(Zippia)
8. 32% Of Small Businesses Apply To Non-Bank Lenders
In the past, any small business owner would head to their local branch and ask for the finance they needed.
Of course, in the past there was a local branch manager who knew their customers and did their best to help them.
Today, this isn’t the case. All loan applications are centralized and decided completely on a points system.
That’s potentially a large part of the reason 32% of small businesses now apply for a loan to non-bank entities.
In 2016, 19% of loan applications were to non-bank lenders. By 2017 it was 24%, and by 2020 it was 48%.
The rate continues to grow as non-bank entities provide a dedicated service.
That means they often understand the industry and issues better than banks, allowing them to lend when a bank won’t.
Don’t forget, the loan approval and interest rate offered depends on how good the business credit rating is.
This isn’t necessarily the same as your personal credit rating. It’s important to monitor both.
(Zippia)
9. 51% Of Small Rural Businesses Have Loan Requests Approved
It may sound surprising, but 51% of all rural small business loan requests are approved in full. What makes this particularly interesting is that just 17% of businesses are considered rural.
That means rural businesses have a high loan success rate.
In contrast, just 38% of urban small business loan requests are approved.
It is worth noting that small rural businesses are still more likely to rely on a small, local bank than a large bank.
This may be part of the reason why the approval rate is higher.
The latest figures show that 62% of loan applications from rural businesses go to small banks.
In contrast, only 43% of urban small business loan applications got to small banks.
Of course, 55% of banks in rural areas are small banks, and only 25% of city banks are small banks.
That does influence business owners’ decisions regarding who to apply through.
(Zippia)
10. Only 16% Of Small Business Loans Are Received By Women
The statistics show that minority groups still struggle when applying for loans.
In the first instance, women own approximately 30% of all small businesses.
Yet, just 16% of all business loans issued are given to female-run businesses.
A staggering 84% of loan approvals are to male-led businesses.
That’s not the only example of discrimination in finance.
Black Americans make up 13% of the US population. Yet, small businesses run by black Americans get less than 2% of all loan funds offereD.
Interestingly, over 53% of loan applications from small businesses owned by black Americans are approved. That means the majority are denied.
The question is whether the loans are denied based on the applicant or some other unknown factor. It seems likely that it’s the first option.
(Zippia)
11. 15% Of Small Business Loans Go To The Construction Industry
It may surprise you to learn that the type of industry the small business is operating in makes a difference when applying for a loan.
In essence, lending institutions have already decided which industries are likely to return consistent results.
These are the ones which have the best chance of repaying the loan in full.
The construction and renovation industry comes out on top.
After all, construction and renovations are always needed.
That’s why, 15% of approved small business loans go to the construction and renovation industry.
Surprisingly, full-service restaurants also do well when applying for loans.
It’s worth noting that some industries are not eligible for SBA small business loans.
These include gambling, multi-sales distribution, and real estate investment firms.
Knowing this can help you choose the right lender and increase your chances of getting a loan.
You obviously can’t change your industry!
(Zippia)
12. The Majority Of Small Businesses Are Self-Financed
While loans are designed to help small businesses get off the ground or survive through difficult times, the reality is most small businesses don’t use loans.
Instead, the business is self-financed.
In 57% of cases, small businesses are financed by owner investment.
The funds are either removed from savings and investment accounts, or the funds are acquired through remortgaging and similar approaches.
Even at the height of the global pandemic, just 43% of small businesses were applying for loans.
Most small business owners prefer to find their own way through the issues.
Businesses which do take on finance are most likely to get help through the SBA, a large national bank, smaller local banks, or an alternative lending source.
The amount of finance can range from a few thousand dollars to over a million, with a top limit of $5 million.
(Zippia)
13. 85% Of Merchant Cash Advances Are Approved
When considering which lender to choose, it’s worth noting that, according to the latest Fed Small Business Report, Merchant cash advances have the highest approval rating of any lender.
An impressive 85% of small businesses that apply for merchant cash advances get approved.
As mentioned, the industry you’re operating in can help when applying for a loan.
For example, auto and equipment loans are approved 80% of the time.
Business lines of credit are approved, on average, 73% of the time.
Traditional business loans are approved 67% of the time, and SBA loans 52% of the time.
Of course, the merchant cash advance is a relatively safe way to lend.
The merchant can see how much money the business is bringing in and will remove the agreed amount as scheduled directly from your receipts.
(Fed Small Business Report)
14. 36% Of Loan Denials Are Due To A Poor Credit Score
Having your small business loan request denied is a crushing blow for many businesses.
It immediately limits your options and can potentially mean the business will fail.
While there are other lenders, statistics show that 36% of loan denials are because the business credit score is too low.
There are many reasons why this may be the case, such as failing to keep up with payments or simply because the business doesn’t have a credit history.
According to the latest reports, 35% of those denied a loan are denied because they already have excessive debt levels.
But, a third of applicants simply don’t have enough credit history.
Neither of these issues can be fixed quickly, meaning businesses are left looking at alternative options, such as high-interest-rate alternate lenders.
If you want to get approved for an SBA loan then you need to aim for a credit score between 690-720, or higher.
(Fed Small Business Report)
15. 33% Of Small Business Start With Less Than $5,000
In the past, starting a business with less than $5,000 may have seemed virtually impossible.
However, the internet has made a variety of things possible.
That’s why, today, 33% of businesses start out with less than $5,000 in capital.
This approach reduces the risks to the founder or founders, ensuring their personal property isn’t at risk.
The reduction in stress can help these businesses become more profitable.
Of course, starting with low levels of capital does mean the business will grow at a much slower rate.
However, the internet can help to level the field.
Even the smallest business can be visible to millions of potential customers.
(Founderjar)
16. 95% Of Business Loans Have Fixed Interest Rates
Fixed interest rates are a two-edged sword. On the one hand, when interest rates are climbing you’re grateful for the fixed rate.
It helps you keep costs down and saves you money compared to a variable rate.
On the other hand, if interest rates are going down, you’re paying more than you need to on your loan.
Of course, the biggest advantage is certainty. Businesses know exactly what is due and when, making it easier to plan their finances.
Fixed interest rates are generally applied regardless of whether you’re getting a short, medium, or long-term loan.
Long-term loans are generally used to purchase property and will last for at least six years.
Medium-term business loans last between two and five years.
These are often used to help finance medium-term plans, such as expansion.
Short-term loans help when b businesses are struggling and just need a little extra cash flow.
(Fundera)
17. 67% Of Small Business Have Identified Lending Scams
Businesses looking for a loan generally can’t afford to be scammed.
Falling for a lending scam can mean the end of the business and years of hassle trying to resolve the issues.
Unfortunately, it’s something that all small businesses should be aware of.
The number of lending scams has increased dramatically in the last few years.
Part of the reason for this is the global pandemic, but the major reason that 67% of small businesses see lending scams increasing, is the internet.
It’s now very easy to appear as a genuine lender and persuade you to part with personal information.
You simply need to believe they will lend you the required funds.
The scammer will then be able to use your personal and business details to steal data and even company money.
That’s why all businesses should undertake a due diligence survey before proceeding with any lender.
(BBB)
Summing Up
The above small business lending statistics paint an interesting picture.
Getting funds for your business isn’t always easy. Your industry and credit rating plays a vital part in the process.
That’s the main reason many businesses are self-financed and grow slower than the owners would like.
Of course, slow growth is often better as it’s more sustainable.
The bottom line is simple, it’s possible to get small business loans.
But, you need to do your homework first, approach the right lender, and make sure your personal or business credit rating is good.
You can use the above statistics to help you choose the right lender.
