Rate is only half of loss

Small loans fail more often and lose more when they fail

Charge-off rate, loss severity and their product, by loan size band. Seasoned FY2010–FY2019 originations.

Charge-off rateSeverityExpected loss

Severity compounds the failure rate rather than offsetting it. A $100,000 working-capital loan is typically secured by a general lien over assets worth little in liquidation; a $3 million acquisition loan is usually secured by real estate that holds value whether or not the business survives.

72.9%average severity — share of approval written off when a loan fails

5.91%expected loss, loans under $150,000

1.50%expected loss, loans above $2.5 million

Source: Analysis of SBA 7(a) FOIA loan-level data (as of 31 March 2026), seasoned FY2010–FY2019 originations. Severity is gross charge-off as a share of original approval, before recoveries. Published by sba-feasibility-study.com.