Small Business Lending Statistics By Reasons, Types, Industry, Outstanding Debt, Demographic, Failure And Influencing Factors

Introduction

Small Business Lending Statistics: Small business loans segment plays a key role in helping small companies grow, create jobs, and drive the economy forward. These loans give businesses essential funds they need to buy equipment, hire workers, and invest in new opportunities. In 2024, small business lending has shown effective trends, rising interest rates, changes in the economy, and new financing options influencing those.

While some businesses struggle to get loans due to stricter lending rules, others are finding success through alternative funding sources. This article explores the latest statistics and current trends from different insights, showing how economic policies and financial technology are shaping this sector. All explained statistics highlight both the challenges and opportunities small businesses face in securing the funds they need.

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• Small Business Lending Statistics show that the average small business loan amount is approximately USD 663,000, according to the Federal Reserve’s latest report.
• In early 2024, small businesses in southeast England got 21% more loans, but in North East and Wales, loans dropped 18%.
• The percentage of small businesses applying for traditional financing has decreased over recent years, from 43% in 2019 to 34% in 2021.
• In 2021, only 31% of small businesses received the full amount of financing they sought, a decline from 51% in 2019.
• The number of small businesses with debt dropped from 80% in 2020 to 74% in 2021, mostly under USD 100,000.
• As of 2024, the SBA provided USD 56 billion in loans, 7% more than in 2023, supporting over 100,000 small businesses.
• Recent Fed rate cuts made loans cheaper, prompting small businesses to rethink spending and investments.
• Small Business Lending Statistics in January 2024 further reported that around 53% of small business owners reported that they couldn’t afford to take out a loan due to high interest rates.
• More small businesses now use crowdfunding and fintech loans as fewer apply for traditional bank loans.
• China is boosting loans to tech startups by accepting intellectual property as collateral, increasing such loans by 57% in 2024.

General Small Business Lending Statistics

• According to Yahoo report analyses, higher interest rates and inflation are tough for small businesses, averaging USD 195,000 in debt.
• About 39% of banks approve small, simple loans within a day or even faster.
• In March 2024, alternative lenders in the U.S. approved more than 28% of small business loan requests, the highest rate.
• Male-owned small businesses got 71.6% of approved loans, while women-owned businesses received only 28.4%, despite representing 39.1%.
• Recent data reveals that Georgia leads with the highest average loan approval amounts over the past five years.
• The United States has 33.2 million small businesses, providing jobs for over 61.5 million people across the country.
• Small Business Lending Statistics also show that only 31% of small businesses got the full loan amount they requested in 2024.
• Moreover, around 21.4% of businesses are women-owned, and 20% are owned by minorities.
• In the second quarter of 2024, small business bank loan interest rates ranged between 5.75% and 11.91%, depending on terms.
• In April 2024, the CFPB introduced a rule requiring lenders to gather and report demographic details of small-business loan applicants.
• The NFIB survey showed small businesses needed better credit quality.

Small Business Lending Approval Statistics

• In 2024, large banks approve small loans quickly, with 90% completing approvals within ten business days.
• About 39% of banks approve small, simple loans within a day or even faster.
• Meanwhile, almost 76% of banks can approve small loans within just five business days.

(Source: kansascityfed.org)

• In the first quarter of 2024, small banks approved more loans, with their approval rates rising from 89% to 93%.
• Midsized banks also showed improvement, increasing their approval rates from 66% to 73%.
• Meanwhile, large banks kept their approval rates steady at 49%.

Small Businesses Reasons to Apply for Laon

(Reference: licdn.com)

• A 2024 survey found that 42.4% of business owners used funds mainly to expand their businesses.
• In addition, 29.4% of loans were used for equipment, while 28.6% went toward marketing and advertising.
• The top financing reasons were franchising (27.6%), followed by real estate projects (26.8%) and buying businesses (25.4%), showing diverse needs.
• Small Business Lending Statistics further represent the other common reasons small business loans are inventory purchases (24.2%), cash flow for everyday operations (22.4%), payroll expenses (21.8%), debt consolidation/refinancing (18.6%), and startup costs (18.2%).

Small Businesses Specific Types of Lending Products

• Small Business Lending Statistics also show that Government-guaranteed loans are offered by 42% of small banks and 74% of large banks.
• Small banks offer term loans 92% of the time, while large banks provide them 86%.
• Small banks offer lines of credit to 88% of small businesses, while large banks provide them to 86%.
• Letters of credit are offered by 62% of small banks and 78% of large banks.
• Small banks issue credit cards to 12% of their clients, while large banks provide them to 38% of their customers.

Small Business Loan Statistics by Industry

Small Business Loans Rate Statistics

• New small business lending dropped 6.7% from last year and 6.3% from the previous quarter.

(Source: kansascityfed.org)

• Outstanding loan balances grew by 4.4% in 2024, even though new lending dropped compared to 2023.
• Over USD 74 billion in small business loans were reported, with tighter credit standards for ten quarters.
• Small business loans increased by 4.4% compared to early 2023, while C&I loans dropped by 3.5%, keeping the totals steady.
• New small business loan balances dropped 6.3%, with term loans down 4.6% and credit lines 8.3%.

(Source: kansascityfed.org)

• Small Business Lending Statistics show that in the first quarter of 2024, most new small business term loans had lower median interest rates.
• However, rural banks saw a slight rise in fixed rates, while urban banks offered the highest variable rates at 8.8% and the lowest fixed rates at 7.9%.
• In early 2024, interest rates on most new small business credit lines were higher, except for fixed-rate options at urban banks, which were the lowest at 7.6%. Variable rates at urban banks were the highest at 9.3%.
• In Q1 of 2024, new-term loans had a minimum interest rate of 4.7%, while credit lines started at 5%.
• During the same duration, almost 24% reported credit line changes; the net increase dropped to 6%.
• Around 37% noticed a shift in small business loan demand; 12% reported an overall decline.

Loan Funds Spending Statistics

(Reference: licdn.com)

• As mentioned in Small Business Lending Statistics, almost 21% of people use the money within five to six months.
• Meanwhile, 19% spent it in three to four months, and 16% finished using it in one to two months.
• Furthermore, in 2024, other shares of U.S. small businesses by loan funds spending statistics are followed as 13% (7 to 8 months), 11% (9 to 10 months), 8% (11 to 12 months), 5% (less than 1 month), 4% (more than 1 year) and 3% (still spending).

Small Business Owners Apply for Loans Statistics

• Large Banks: Approximately 43% of small businesses applied for loans at large banks.
• Small Banks: In 2024, around 42% of SB owners submitted loan applications to small banks.
• Online Lenders: About 20% of applications were made through online lending platforms.
• Credit Unions: 8% of small businesses turned to credit unions for their financing needs.
• Community Development Financial Institutions (CDFIs): 3% of small business loan applications were directed to CDFIs.

Small Business Lending Statistics by Outstanding Debt

(Reference: enterpriseappstoday.com)

• Over 70% of small businesses in the U.S. carry debt, but 30% remained debt-free in 2024.
• Meanwhile, small businesses with 17% owing USD 1 to 25,000 and 21% owing USD 25,000 to 100,000.
• As of 2024, other outstanding debt amounts by small business shares are followed by USD 100K to 250K (13%), USD 250K to 1 million (13%) and USD 1 million+ (6%).

Small Business Lending Demographic Statistics

Failure Reasons of Small Businesses

(Reference: creditsuite.com)

• According to Business Insider, cash flow issues are the main reason why 82% of small businesses fail.
• Businesses fail for other reasons, such as 42% failing because there’s no demand for their product or service, 29% running out of money, 23% having the wrong team working together, and 19% losing to competitors who do better.

Small Business Financing Statistics

(Source: fitsmallbusiness.com)

• About 36% of small business owners use personal savings to cover financial gaps, while 21% rely on personal loans.
• Over half of small businesses have more than USD 50,000 saved, 14% have under USD 10,000, and 23% exceed USD 250,000.
• Small Business Lending Statistics in 2024 states that only 7% of business owners reduced their pay, while 26% completely stopped taking a salary in 2023.
• In FY23, the SBA supported 57,300 small businesses with USD 27.5 billion in 7(a) loans.

Demand Influencing Factors of Small Business Lending

• For instance, nearly 70% of banks reported a decline in small business loan demand in the first half of 2024, attributed to higher borrowing costs and economic concerns.
• In January 2024, 53% of small business owners reported that they couldn’t afford to take out a loan due to high interest rates.
• Around 78% of small business borrowers were likely to use digital platforms for financing, driven by streamlined processes and quicker access to capital.
• Small Business Lending Statistics depicts that in Q1 of 2024, small businesses in southeast England experienced a 21% increase in the value of loans and overdrafts, while other regions, such as the North East and Wales, saw declines of 18%.
• In fiscal year 2024, the U.S. Small Business Administration supported USD 56 billion in financing, marking a 7% increase from the previous year, driven by the issuance of smaller loans.
• The private credit industry has grown substantially, reaching nearly USD 2 trillion in assets, driven by attractive yields exceeding 11%.
• In the digital era, small businesses increasingly rely on technology to streamline their financial operations. An online invoice receipt maker can be instrumental for small businesses by automating invoicing and payment tracking.

Conclusion

The small business lending segment is changing quickly, shaped by higher interest rates, new technology, and shifts in the economy. Many business owners are turning to alternative options like crowdfunding or fintech platforms as traditional loans become harder to get.

However, support from programs like the SBA and creative global solutions, such as using intellectual property as collateral, offer hope. Despite challenges, small businesses remain resilient, finding innovative ways to secure funding and grow in an evolving financial environment.