Business loans are crucial for helping small businesses thrive by providing the necessary capital to cover startup costs, invest in inventory, or upgrade equipment. For many small business owners, these loans are not just a means to an end; they are a lifeline that enables them to seize growth opportunities and navigate the challenges that come their way. Therefore, it is vital to understand the current lending landscape that small businesses are facing.
Key stats.
68% of small business owners say access to financing is the most important factor in the growth of their businesses.
67% of small business owners have no preference about which type of lender they get a loan from.
85% of small business owners said that speed to loan approval is important when selecting a lender.
77% of small business owners surveyed stated that they prefer to apply for a loan online or via a mobile app.
50% of small businesses say they don’t know if the bank they use for checking has the right loan options for them.
Only 24% of small business owners apply through the bank they already work with.
The average small business loan is $38,000.
59% of SBA loans are approved.
High-level overview.
Lendio recently surveyed 1000+ small business owners to better understand how financing affects the success of their business, their experience in today’s lending environment, and how they view the future of small business lending. Of those small business owners, 68% said that access to financing is the most important factor in the growth of their businesses. Additionally, 46% of those 1000+ small business owners said they would see anywhere from 30-100% revenue growth if they had access to financing their business needs.
Lendio found that 78% of the small businesses it interviewed have a positive outlook on their ability to access capital in the next year. Perceptions vary based on how well-qualified the small business is for a loan. Only 12% of the most qualified borrowers stated that the majority of small businesses don’t have access to the capital they need while 21% of the least qualified borrowers said the same.
Lendio found that while small business owners generally have a positive outlook on their ability to access capital, they have a fairly neutral perception of the loan application process. When asked which type of lender they’d prefer 67% of small business owners said they have no preference.
The takeaway:
85%
of small business owners say speed to loan approval is important when selecting a lender.
While larger enterprises are willing to experience lengthy loan approval and funding processes, small business owners behave more like consumers–they prefer a quick and easy loan process.
85% of small business owners said that speed to loan approval is important when selecting a lender.
77% of small business owners surveyed stated that they prefer to apply for a loan online or via a mobile app.
Lendio also found a general lack of awareness of the small business loan process.
50% of small businesses say they don’t know if the bank they use for checking has the right loan options for them.
Only 24% of small business owners apply through the bank they already work with.
Lendio found that 22% of small business owners either don’t know or don’t have a preference for their preferred type of business financing.
These findings point toward a need for more education about the lending landscape for small business owners.
Average business loan amount.
Understanding the average loan amounts small businesses receive is critical for entrepreneurs seeking to plan their financial strategies effectively. Businesses should be aware of not only the amounts they might qualify for but also how these figures align with their growth aspirations and operational needs.
The average amount a small business receives through Lendio’s marketplace is $38,000.
The average SBA loan amount in 2023 was $479,685.
On average, small businesses are offered 50% of the loan amount they initially asked for.
SBA loan approval rates.
The Small Business Administration (SBA) plays a vital role in supporting small businesses by providing access to loans with favorable terms. In 2023, approximately 59% of SBA loans were approved (34% received full approval, 25% received partial approval), indicating that over half of small business owners successfully navigate the application process. This is particularly encouraging for entrepreneurs who might face challenges securing traditional financing, as SBA loans often come with lower interest rates and longer repayment terms.
Reasons for a business loan.
Lendio found that the majority of small businesses pursue loans for a variety of essential reasons, primarily to secure working capital (33%) to support daily operations and manage cash flow. Additionally, small businesses often seek financing for crucial investments like equipment purchases (19%), expansion efforts (15%), starting a business (14%), payroll (6%), real estate (4%), or for other purposes (9%). Each of these reasons highlights the integral role that loans play in facilitating growth and sustainability in the competitive business landscape.
Gender insights
Men and women generally had similar responses to Lendio’s survey questions, but a few differences stood out.
Only 46% of women are positive or very positive that they can access the capital they need compared to 55.8% of men who said the same. 13% of women also rated their ability to access the capital they need as “very poor” compared to 9% of men.
Another key insight points to a need for education surrounding the business lending landscape, especially for women. 53.3% of women and 41.7% of men are unsure of their primary bank’s loan options. More women business owners stated that they would like education on the business loan application process across the board except interest rates (this was equal). This includes lender types, loan agreements, and loan types.
Women-owned businesses received just 32.6% of approvals and 28.4% of the dollars offered in SBA 7(a) and 504 loans in the 2024 fiscal year. Across the lending landscape as a whole, women are less likely to receive the full amount of funds requested. In 2023, 45% of women-owned businesses were approved for the full amount of capital requested vs. 55% of men-owned businesses.
Additionally, 25% of women are denied a business loan compared to 19% of men.
Minority insights
When it comes to accessing business loans and receiving funding, entrepreneurs of color can face significant challenges.
84% of businesses started by a person of color relied on personal savings or funding from friends or family to fund their businesses.
28% of employer businesses started by a person of color have obtained a business loan compared to 48% of white-owned business startups.
Nearly half of black business owners who apply for a loan are denied.
Conclusion
Understanding the lending landscape for small businesses is crucial for their growth and success. The statistics presented highlight the significant role that access to financing plays in empowering entrepreneurs across the United States. While optimism prevails among small business owners regarding their ability to secure capital, challenges persist, particularly for women, minority, and veteran entrepreneurs.
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Information provided on this blog is for educational purposes only, and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strives to keep its content up-to-date, it is only accurate as of the date posted. Offers or trends may expire, or may no longer be relevant.
