Key takeaways

  • Not all banks offer small business loans, but a majority do
  • Big banks may have longer application wait times and stricter requirements
  • Getting a small business loan through a small bank, credit union or online lender is often easier

Whether you want to purchase new equipment, expand to a new location or buy additional inventory, you may someday need a bank loan for business. But do all banks offer small business loans? 

The short answer is that most banks include business loans among their products. Exceptions include investment banks like Goldman Sachs, especially small banks and credit unions. That said, approval rates differ between types of institutions. Bigger banks often have stricter lending policies that make approval more difficult.

With thousands of options, how do you choose the right bank? Your choices range from large national banks like Bank of America; to tiny, local banks like Oakwood Bank of Texas, possibly the smallest bank in the country, to credit unions like Suncoast Credit Union. And some banks even operate entirely online.

Small business bank loan approval rates

The 2022 Small Business Credit Survey also detailed the approval rates of loans, lines of credit and cash advance applicants. But these numbers may represent customers who were approved for some funding but not the full amount they requested. Compared to 2021, 2022 approvals were up as the economy recovered from the pandemic.

Approval rate 2021 Approval rate 2022
Small banks 68% 82%
Online lenders 54% 71%
Big banks 49% 68%
Finance companies 69% 76%

Source: Fed Small Business 

Business loans from big banks

Small business loans, lines of credit and cash advance approvals were up from 49 percent in 2021 to 68 percent in 2022, according to the 2022 Small Business Survey. While this is a steep increase, it’s worth noting that approvals were at 61 percent in 2020.

Though these banks often have strict qualification requirements, they also tend to offer large amounts, low rates and long-standing expertise in handling business loans.

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Bankrate insight

Some of the best national banks for low rates on small business loans include:


Business loans from small banks

While the big banks mentioned above are well known, thousands of smaller banks — local, regional or community banks — exist throughout the country. 

Small banks also saw an increase in loan approvals year over year from 2021 to 2002. While just 68 percent of applicants were at least partially approved in 2021, 82 percent of small bank applicants had success the next year. Back in 2022, 76 percent of small businesses were approved.

Smaller banks may lack the financial resources of the Big Five. But they may be more willing to work with fellow local businesses — especially if you have a prior banking relationship.

Business loans from credit unions

Small business owners should not overlook the options provided by credit unions. According to the National Credit Union Association, 4,686 federally insured credit unions are in the country as of June 2023.

The 2022 Small Business Credit Survey found that 65 percent of small businesses were at least partially approved by credit unions. While there’s no data for 2021 regarding credit union approvals (the survey’s methodology was amended in 2022), more small businesses are choosing credit unions. Between 2019 and 2021, 7 percent of small businesses sought funding from credit unions. In 2022, that figure rose slightly to 8 percent. 

You may need to be a member to land a credit union loan. But because credit unions operate as nonprofits, you may find better rates and lower fees than at other lending institutions.

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Bankrate insight

People who qualify as low income or are part of an underserved community may want to explore Community Development Financial Institutions (CDFIs) or the SBA Community Advantage loan.


Some applicants may also qualify for funds from minority depository institutions (MDIs), which are mission-driven and focus on giving communities of color access to loans and other funding. MDIs are also federally insured.

Banks vs. other lenders

Not all banks offer all kinds of business loans. Whether applying for a business loan from a bank, credit union or online lender, you need to determine the type of business loan you want. For example, your small business may need a commercial real estate loan, equipment financing or a line of credit. 

You also want to review the lender’s requirements. They may evaluate things like your business’s annual revenue, business plan and your credit score. 

When it comes to bank requirements, there are some things to know:

  • Banks often set stricter requirements than online and alternative lenders.
  • Banks may require at least two years in business.
  • Banks may also require a high personal credit score and a well-established business credit score.

According to the 2022 Small Business Credit Survey, small businesses that applied for loans from big banks experienced more challenges with applying, waiting for approval and receiving funding than people who applied with small banks or online lenders.

Online lenders have their own benefits and downsides when it comes to approval requirements:

  • Online lenders may only require 6 to 12 months in business
  • Online lenders may have less favorable interest rates than banks
  • Online lenders often have short repayment terms

Alternatives to bank loans for small businesses

If you want to avoid a loan altogether, there are a few ways to inject your bank account with cash without taking out a term loan or line of credit. Check out these alternatives:

  • Business credit cards. Like a business line of credit, a business credit card is revolving and can be a good option for short-term needs. Limits are often lower than business loans, but you could get a low introductory APR, and if you pay the balance in full monthly, interest won’t accrue.
  • Grants. This type of funding doesn’t have to repaid. Grants are available locally and nationally, and money is often available to underserved communities. This includes women, people of color and business owners from low-income areas.
  • Crowdfunding. Several types of crowdfunding exist, with donation- and reward-based being the most popular. With reward-based crowdfunding, donors receive gifts or products from a business in exchange for donations. A wide range of crowdfunding platforms are available, including Kickstarter and GoFundMe.

The bottom line

Not all banks offer small business loans. But between large national banks, small local or regional banks and credit unions — both physical and online — there are thousands of options.

The key is to compare options and evaluate each institution’s lending requirements. For example, if you have bad credit, going to an alternative online lender may increase your chances of approval.

The best way to secure financing is to start looking at where you do your business banking. Your existing relationship may increase your odds of getting a loan. Then, compare terms, interest rates and fees among several other banks. Put together the requested documents and apply to see what each lender will offer you. 

Frequently asked questions

  • Banks have different requirements for lending, but you typically need to provide bank statements, income statements, business license information and other revenue documents and business information.
  • Your best chance of approval for a small business loan depends on several factors, including your credit and annual revenue. Most applicants with low-risk credit profiles are approved at a small bank. If you don’t have great credit or are just starting out, an online lender will likely be your best option.
  • If you already have a relationship with a bank, you may want to apply for a loan there. The institution will have access to some of your financial information, and you may have a better chance of approval. Small banks, large banks and credit unions typically offer various loan products for businesses.