Smaller loan applications from small business owners are on the rise, but securing these loans is becoming increasingly difficult.
Small businesses are increasingly turning to smaller loans, according to the latest Small Business Credit Survey by the Federal Reserve. In 2025, while the average SBA loan size was a sizable $435,827, a significant number of businesses were seeking financing in the range of $100K, $50K, and even $25K.
These smaller loans can be crucial for businesses looking to sustainably scale, manage rising costs, and adapt to changing market conditions. Yet, accessing these smaller loans isn't always a smooth process. Here's our take on the data:
Small Business Loan Trends
- Popular Loan Sizes: The most popular loan amount sought by small businesses was $25,000 or less, accounting for 40% of the total loans sought over the previous 12 months.
- Decreasing Loan Sizes: The average SBA loan amount has dropped by 38% over the past four years, from a high of $704,581 in 2021 to the current $435,827.
- Low-revenue Businesses: Loans under $25K were more popular for businesses making under $100,000 in annual revenue, with 42% of businesses in this revenue bracket seeking smaller loan sizes.
- Female-owned Businesses: Over one-third (35%) of female-owned businesses sought financing of $25K or less, compared to 19% of male-owned businesses and 24% of equally-owned businesses.
- Barriers to Access: Low time in business, limited credit history, and smaller revenues can all bar businesses from accessing smaller loans, even when they need them the most.
The Perks of Small Business Loans
Smaller loans can offer small businesses a number of advantages.
- Lower Risks: Smaller loans mean lower risks for small businesses, especially if a business owner chooses to scale incrementally.
- Lower Borrowing Costs: Smaller loans can help reduce borrowing costs and improve eligibility.
- Interest Rates: Higher interest rates can make larger loans less appealing, driving businesses toward smaller loan options.
Chances for Small Business Loans
While smaller loans may be more appealing, they aren't always easy to come by.
- New Businesses: Traditional lenders may be hesitant to lend to newer businesses due to perceived risks.
- Minimum Lending Requirements: Many traditional lenders are geared toward larger loan amounts, making it difficult for smaller businesses to find loans with minimums that match their needs.
Navigating Loan Obstacles
Small businesses seeking smaller loans have a few options to consider:
- Business Credit Cards: These provide flexible funding options for smaller loan amounts, with added perks like rewards on spending. Business credit cards tend to have more relaxed revenue and time-in-business requirements.
- Business Lines of Credit: Similar to business credit cards, lines of credit often have higher limits and don't always come with annual fees, but may require collateral.
- SBA Microloans: These loans are targeted at business owners seeking smaller loan amounts (up to $50,000), provided by non-profit organizations and guaranteed by the government. They have relaxed requirements and rate caps.
- Opportunity Loan Programs: These programs offer funding with more relaxed requirements, lower interest rates, and reduced borrowing costs to businesses in underserved communities.
In summary, access to smaller business loans is critical for small businesses in America, especially those seeking amounts under $25,000. While these loans can help save on borrowing costs and lower the risk of default, access can be a challenge for newer businesses or those with limited revenue and credit history. By preparing financial documentation, building and maintaining good credit, researching lenders, and exploring grants and alternative funding, small businesses can increase their chances of securing smaller loans and supporting their growth objectives.
- Within the small-business sector, it is observed that the majority of businesses (40%) are seeking financing of $25,000 or less, highlighting the growing demand for smaller loans.
- Accessing smaller loans can be challenging for small businesses, particularly for newer businesses and those with limited revenue and credit history, but opportunities such as business credit cards, lines of credit, SBA Microloans, and Opportunity Loan Programs can aid in securing these financial resources.
