Small Business Lending in 2025: Banks Made Fewer Loans, but Bigger Ones
Banks made fewer small business loans last year, and the ones they made were bigger.
That is the takeaway from the 2025 Community Reinvestment Act lending data the FDIC, Federal Reserve and OCC released on November 5, which PYMNTS framed as a shift to fewer, bigger loans. Reporting banks originated 8,559,067 small business loans in 2025, about 2% fewer than in 2024, while the dollars behind them rose about 4.7% to $270.2 billion, according to the agencies' tables as compiled by RATA Associates. Counting purchased loans too, 720 lenders reported about 8.9 million loans worth about $291 billion, according to ICBA.
The headline holds up. But three years of the same data say more than "bigger loans," and some of it matters to anyone who funds or brokers working capital outside a bank.
First, what this data covers
The CRA numbers come from banks and savings institutions above an asset threshold, which was $1.564 billion for 2024, plus some smaller banks that report voluntarily. A small business loan here means a loan with an original amount of $1 million or less. The regulators' own 2024 fact sheet notes that nonbank lenders such as commercial finance companies also make these loans and are not covered.
So this is a picture of bank behavior. Revenue-based financing providers, factoring companies, fintech lenders and software platforms that lend to their own merchants do not show up in it. For banks, though, it is close to the whole market: CRA reporters accounted for 77.6% of small business loans outstanding at depository institutions, by dollar amount, in 2024.
The average bank loan got bigger
Divide the dollars by the number of loans, and the average small business loan originated by reporting banks came to about $30,100 in 2023, $29,500 in 2024 and $31,600 in 2025. That is a jump of nearly 7% in a single year, after a small dip the year before. Those averages are our math on the agencies' totals.
Small loans still make up almost all of the count. PYMNTS reports that 94.6% of 2025 originations were under $100,000 and that they carried 43.2% of the dollars. The official 2024 tables show 95.0% and 44.5%. The money concentrates at the other end of the scale: in 2024, loans above $250,000 were 2.2% of originations and 39.8% of the dollars.
The smallest businesses got a smaller slice
The share of bank small business loans going to companies with annual revenue of $1 million or less has fallen three years in a row: 54.8% of originations in 2023 (per the 2023 fact sheet), 53.8% in 2024, and 52.4% in 2025.
Applied to the totals, that works out to roughly 4.5 million loans to those firms in 2025, down from about 4.7 million in 2024. The tables count loans that were made, not applications or declines, so they cannot tell us whether these owners asked for less credit or banks said no more often.
Big banks own the count, not the dollars
Lenders with $10 billion or more in assets made 87.5% of 2025 small business originations by count but 69.0% by dollars. PYMNTS puts the number of those lenders at 153. Run the math on those shares and their average loan comes to about $25,000, while the rest of the reporting banks averaged roughly three times that.
The biggest banks' share of the dollars has also slipped, from 73.8% in 2023 to 70.7% in 2024 and 69.0% in 2025. The tables do not break out loan products, so they do not show what kind of credit makes up the big banks' high-count, small-ticket volume.
Where the small deals may be going
The CRA tables cannot follow a borrower who leaves a bank, but our other coverage this fall points the same way.
The Fed's October loan officer survey: business loan demand turned negative, and 10 of the 12 banks that reported weaker demand said customers had shifted borrowing to other bank or nonbank sources. Standards for small firms edged tighter, with four banks tightening and one easing out of 59.
OnDeck and Ocrolus: 75% of owners surveyed bypassed traditional banks for capital, and median monthly fintech loan inflows rose 11% year over year while bank loan inflows were flat.
Shopify Capital: bought $1.5 billion of loans and merchant cash advances from its partner banks in the third quarter, up 50% year over year.
Lightspeed Capital: issued about $129 million in merchant cash advances from July through September, up nearly 48% from a year earlier.
None of that proves a deal a bank passed on went to a fintech or a funder. The datasets do not connect that way. But they point in one direction: small-ticket business credit is growing in places the CRA data does not see.
Making small deals pay
PYMNTS argues the next edge in small business lending is making small loans profitable rather than chasing bigger ones. It cites a PYMNTS Intelligence survey of 350 financial institution executives in which 57% named inaccurate or incomplete records as an underwriting obstacle and 52% named outdated information.
Every loan carries underwriting, documentation, and servicing costs, whatever its size, so the smaller the ticket, the harder those costs are to cover. The alternative market built its model around that problem, with bank-statement and cash flow underwriting, fast decisions and repayment tied to revenue. It is also why the SBA is rebuilding its 7(a) origination system: less paperwork per file makes smaller requests easier to serve.
What it means for funders and brokers
Brokers: Banks are giving a smaller share of their loans to businesses with $1 million or less in revenue. When those owners look elsewhere, the broker who can show them more than one option, with clear terms, is in a strong position.
Alternative to bank funders: Competition for the smallest merchants is not only other funders. Platforms like Shopify and Lightspeed reach merchants inside software they already use, with offers built on their own sales data.
Everyone: Watch two numbers in next year's release: the biggest banks' share of the dollars and the share of loans going to the smallest firms. If both keep falling, the gap below the banks keeps widening.
We break down data like this for lenders and brokers every week in The Funding Curve. Subscribe here.