Who gets approved, who doesn't
The Federal Reserve's Small Business Credit Survey shows that of the 60% of small businesses that applied for financing in the last year, only 49% received the full amount requested from banks. Online lenders approved 76% but at higher rates. CDFIs (community development financial institutions) approved 69% — the best balance of access + price.
A third of small business owners who needed financing didn't apply because they expected to be denied or didn't want the debt — "discouraged borrowers" in Fed terminology. Half of these are women- or minority-owned firms.
Why the gap exists
Banks have steadily withdrawn from sub-$250k small-business loans since the 2008 crisis — the unit economics don't support manual underwriting at that ticket size. CDFIs and online lenders fill the gap but with materially higher cost of capital (online lender APRs commonly 18–60% vs bank 7–12%).
The SBA 7(a) program partially closes the gap by guaranteeing 50–85% of loan principal for participating banks, making sub-$250k loans economically viable. SBA loan volume hit $34B in 2024, an all-time high.