Smaller loan requests from small business owners are on the rise, yet securing these loans is increasingly challenging.
Small enterprises are increasingly embracing loans under $100K, according to the latest Small Business Credit Survey from the Federal Reserve. While the average Small Business Administration (SBA) loan size in 2025 was a hefty $435,827, small businesses are searching for financing that fits their budget — and for some, that means dimes, not dollars. But seeking small change isn't always a walk in the park. Here's our take.
What's on the money menu?
- Small fry loans: Loans under $25K are the most sought-after loan size, providing budding entrepreneurs with the opportunity to incrementally scale their businesses and keep borrowing costs at bay.
- Shrinking loans: The average SBA loan amount has shrunk by 38 percent in the last four years, dipping from $704,581 in 2021 to $435,827 in 2025.
- Scaling down by sector: Lower-revenue businesses have a penchant for smaller loans, with loan sizes under $25K more popular among businesses making under $100K annually.
- Ladies' choice: Female-owned businesses overwhelmingly favor loans under $25K, with one-third (35%) of women-led businesses opting for such financing compared to 19% of male-owned businesses.
- Life's barriers: Low time in business, a limited credit history, or smaller revenues can pose obstacles for businesses, even those that need smaller loans the most.
The case of the shelled peanut
In the Federal Reserve's 2025 Small Business Credit Survey, the most popular loan size sought by small businesses in the past year was $25,000 or less. Examining the outcomes:
- 23% went fishing for $25K or less
- 17% sought a catch between $25k and $50k
- 20% cast their lines between $50k and $100k
- 18% dangled a bait of $100k to $250k
- 15% ventured into the deep with a line of $250k to $1 million
- 7% went for the big guns, aiming for over $1 million.
Small businesses have a myriad of reasons to aim for smaller loans. Lower lending rates and the preference for incremental scaling can mitigate risk for small businesses.
Rates are sweeping the leg
Interest rates play a significant role in the size of loans businesses are after. "With interest rates yet to fall as anticipated, many small businesses have been left with no alternative but to accept that the rate environment will remain high for longer and move forward with their loan applications," says Mary Miklethun, senior vice president and product lead for business deposits and lending at US Bank.
As the Federal Reserve has been hesitant to lower the Prime Interest Rate from its high prices, the average loan size has dwindled. The higher the rate, the pricier the loan, which can cap how much a business qualifies for based on its revenue and creditworthiness.
Lower-revenue firms, smaller loans
Businesses with reduced annual revenues tend to seek financing in smaller denominations, often in alignment with their financial capacity and projected growth trajectory.
According to the 2025 Small Business Credit Survey:
- 35% of businesses earning $25k or less annually sought financing under $25k or less.
- 42% of businesses with revenues ranging from $25,001 to $50,000 sought financing totalling under $25k.
- 39% of businesses bringing in $50,001 to $100,000 per year sought financing under $25K or less.
- 32% of businesses making $100,001 to $250,000 per year sought financing under $25k or less.
- 25% of businesses earning $250,001 to $1 million per year sought financing under $25k or less.
- 19% of businesses with annual revenues between $500,001 and $1 million applied for financing under $25k or less.
- 13% of businesses earning $1 to $5 million per year sought financing under $25k or less.
- 5% of businesses making $5 to $10 million per year applied for financing under $25k or less.
- 5% of revenue titans earning over $10 million per year sought financing under $25k or less.
Small businesses looking for smaller loans make sense from a scaling perspective. Additionally, over half (56%) of surveyed small business owners sought financing to meet operational expenses, often citing payroll, utilities, leases, and other everyday costs as reasons for the loan request.
Ladies' purse strings
Female entrepreneurs show a predilection for smaller financing. According to the 2025 Small Business Credit Survey:
- 35% of female-owned businesses sought financing of $25K or less, amounting to 19% of male-owned businesses and 24% of equally-owned businesses.
- 16% of female-owned businesses sought financing between $25,001 and $50k, corresponding to 17% of male-owned businesses and 21% of equally-owned businesses.
- 20% of female-owned businesses sought financing between $25,001 and $50k, compared to 20% of male-owned businesses and 19% of equally-owned businesses.
- 16% of female-owned businesses sought financing between $50,001 and $100k, compared to 18% of male-owned businesses and 21% of equally-owned businesses.
- 11% of female-owned businesses sought financing between $100,001 and $250k, compared to 18% of male-owned businesses and 13% of equally-owned businesses.
- 2% of female-owned businesses sought financing over $1 million, compared to 9% of male-owned businesses and 2% of equally-owned businesses.
Female business owners may have several reasons behind seeking smaller loans, such as lower projected revenues, the preference for starting small and growing sustainably, and initial capital from personal savings. When Anandita Yadav, the founder and owner of cotton clothing company Zillajee, decided to launch her product line, she put her personal finances on the line, in part due to the difficulty in securing funding for smaller enterprises. "I didn't want to take a loan initially," Yadav said. "So that's why I started with $500, and since then my business has grown profitably. Whatever profits I've earned, I've put them back into the business."
Going out of pocket with small change
While smaller loans offer the advantage of gradual financing, they're not always accessible. Starting businesses may find going into debt more risky than they're comfortable with, especially when pursuing financing can be highly competitive. Moreover, newer businesses are generally perceived as riskier to lenders. "Most lenders expect the business to have established some amount of time before extending credit," Miklethun explains. "It's all about how you assess risk, and smaller loan sizes tend to correlate with businesses that have less history and less to go on in terms of their ability to repay."
In addition, many traditional lenders are geared towards larger loan amounts, with some offering products whose minimums start in the tens of thousands of dollars. When Yadav sought to scale up her business by purchasing more inventory and pushing new products, she encountered problems finding a loan suitable for her annual revenue. "All the stuff I read online that has to do with funding or investing in a business is focused more on medium and large businesses," Yadav said.
Without access to smaller loans, small businesses may struggle with scaling their businesses, paying their operating expenses, weathering slow seasons, or handling emergency costs. Despite these challenges, small businesses can still find ways to secure financing.
Cracking the safe with small loot
Small businesses seeking business loans on the smaller side have a few options:
Small change plastic
Business credit cards can provide flexible financing solutions for smaller borrowing amounts. These cards may occasionally come with perks such as the opportunity to earn rewards on everyday purchases. Credit cards generally have more relaxed revenue and time-in-business requirements compared to traditional loans.
When evaluating a business credit card, take heed of a few considerations. Many business credit cards charge annual fees. Applying for a business credit card will involve a credit check, which may limit options for borrowers with weak or limited credit histories. Furthermore, business credit card rates tend to be somewhat elevated.
Lining up credit at the bank
A business line of credit operates similarly to a business credit card, with a few key differences. Lines of credit often have higher limits and don't always require an annual fee. They may also offer reduced interest rates compared to credit cards. Like a credit card, a line of credit allows you to draw as much or as little as needed over the loan term.
Qualifying for a line of credit may require a minimum revenue, a certain time in business, and a relatively strong credit score. Some lines of credit may require collateral or a personal guarantee.
Public checkbooks
Certain Small Business Administration (SBA) loans target business owners seeking smaller loan amounts known as microloans. SBA microloans offer government-guaranteed funding of up to $50,000 to qualified borrowers. They have more lax requirements compared to other SBA loans and have rate caps to keep borrowing costs down. SBA microloans require collateral or a personal guarantee, and they have a more restricted pool of lenders (as they're offered by non-profit institutions rather than traditional lenders.) While they can offer reduced borrowing costs and relaxed credit requirements, they may be tougher to qualify for, demand more documentation, and come with longer waiting periods.
Opportunity economy
If you're part of an underserved community, then you may qualify for an opportunity loan program. These programs offer funding with more relaxed requirements, lower interest rates, and reduced borrowing costs to borrowers who might otherwise struggle to access capital. "There are classes in the economy who haven't had the same economic opportunities, and they're starting smaller," Miklethun explains. "We have a program called the Business Diversity Lending program, which is available to women-owned, veteran-owned, and minority-owned businesses, and it offers somewhat modified credit criteria with the intention of addressing historically economically disadvantaged classes."
Have a chat with your lender to explore such options, or seek out lending programs in your area that specialize in opportunity funding.
In all our pockets
Small business loans under $100K are essential to small businesses across the nation. Though loans under $25k are popular among entrepreneurs, especially as a way to save on borrowing costs and reduce the risk of default, access to these types of loans can prove difficult for newer businesses and businesses with limited revenue and creditworthiness. Those sectors, such as female-owned businesses, which tend to rely on smaller loans the most, may face the greatest barriers to access.
Small businesses seeking smaller business loans may find their financing needs met through different channels like credit cards, lines of credit, SBA microloans, or programs catering to underserved communities.
- Small businesses, especially those with lower annual revenues and female-owned businesses, are increasingly favoring loans under $25K, as they offer incremental scaling and help mitigate risk.
- Smaller loan amounts become more popular as businesses with reduced revenues look for financing that fits their budget and aligns with their financial capacity and projected growth trajectory.
- Female entrepreneurs, such as Anandita Yadav, the founder of cotton clothing company Zillajee, may often seek smaller loans due to lower projected revenues, the preference for starting small and growing sustainably, and initial capital from personal savings.
- To find financing for smaller loan amounts, small businesses can explore various options such as business credit cards, lines of credit, SBA microloans, or opportunity loan programs catering to underserved communities.
