SBA Loan Default Rates by Industry (Charge-Off Data From SBA Loan Records)

Arts, entertainment and recreation led the sectors at 10.45%, while finance and insurance had the lowest rate at 4.72%. Retail, transportation and wholesale trade fill out the rest of the top four.

These shares count every loan approved in FY2010-2026, including loans still being repaid, so they run lower than the resolved-loan rates above. Use them to compare sectors with each other, not with the other chart.

Residential remodelers topped this list at 12.48%, with fitness centers at 11.35%. Dentists, hotels and vets sit at the bottom, with veterinary services lowest at 2.31%.

Loans approved in FY2013 charged off at 6.27%, while FY2018 loans reached 9.97%. Later cohorts are still partly open, so their rates can still move.

Small loans failed far more often: 5.9% of loans under $50k were charged off, against 0.7% of loans of $5M and up. These are shares of all approvals, including open loans, so compare the bars with each other.

Full-service restaurants stayed between 8.32% and 10.48% in every approval year shown. That consistency suggests the risk is built into the business model, not a single bad year.

20 industries with the highest SBA 7(a) charge-off rates (four-digit NAICS, FY2010-FY2019 approvals, at least 100 resolved loans)

Source: CT Acquisitions, SBA Loan Default Rates by Industry 2026: Charge-Off League Table from 15 Years of 7(a) Data (computed from SBA 7(a) FOIA files as of Sep 30, 2025). Download as image

20 industries with the lowest SBA 7(a) charge-off rates (four-digit NAICS, FY2010-FY2019 approvals, at least 100 resolved loans)

Source: CT Acquisitions, SBA Loan Default Rates by Industry 2026: Charge-Off League Table from 15 Years of 7(a) Data (computed from SBA 7(a) FOIA files as of Sep 30, 2025). Download as image

Why published SBA loan default rates differ: same SBA records, different measures

Source: CT Acquisitions, SBA Loan Default Rates by Industry 2026: Charge-Off League Table from 15 Years of 7(a) Data (computed from SBA 7(a) FOIA files as of Sep 30, 2025); SBA Loan Index (Mario Bailey), SBA Charge-Off Rate Benchmarks: 919,729 Loans by Industry, Size, State & Vintage (SBA FOIA 7(a) and 504 data, as of 2026-03-31); Forvis Mazars, How to Avoid a Charge Off on Your Next SBA 7(a) Loan; Finance Clearly, SBA 7(a) Charge-Off Rates by Franchise Brand, Industry and State (FY1992-2026, CC BY 4.0). Download as image

Highest SBA 7(a) charge-off rates over FY1992-2026, industries with at least 5,000 resolved loans

Source: Finance Clearly, SBA 7(a) Charge-Off Rates by Franchise Brand, Industry and State (FY1992-2026, CC BY 4.0). Download as image

What is the average SBA loan default rate?

It depends on how you count, which is why you see such different numbers quoted online. Measured by loan count, 7.91% of resolved SBA 7(a) loans approved in FY2010-FY2019 ended in charge-off. Resolved means the loan was either paid in full or written off. Loans still being repaid are left out.

Measured by dollars, the same group lost 3.59% of gross approved amounts. The gap tells you something useful: small loans fail more often than large ones, so they push the count-based rate up without moving the dollar rate much.

A third measure counts every approval, including open loans. On that basis, 4.0% of 7(a) loans approved in FY2010-2026 had been charged off as of Mar 31, 2026. That figure looks safer only because many of those loans have not had time to fail yet.

When a lender, broker or seller quotes you a default rate, ask which measure it is. The resolved-loan rate is the closest thing to your real odds over the life of the loan.

Which industries have the highest SBA loan default rates?

The worst four-digit industry was electronic and precision equipment repair, at 18.38%. Taxi and limousine service followed at 17.22%, then other ground passenger transit at 15.77% and electronics and appliance stores at 15.73%.

A few patterns show up again and again. Businesses that lost ground to a new technology or a new competitor sit high on the list: think taxi fleets after ride-hailing, or shoe and department stores after online shopping. Businesses that depend on discretionary spending, like amusement parks and travel agencies, fall apart fast in a downturn. And many residential construction trades combine lumpy cash flow with fixed equipment costs. Residential building construction charged off at 11.90% across 8,522 resolved loans, so that rate is not a small-sample fluke.

Restaurants deserve their own mention because so many owners use SBA money to open one. Full-service restaurants charged off at 10.10% and limited-service restaurants at 10.79%. That is well above the 7.91% average, and the full-service rate held steady across approval years.

What are the safest businesses to finance with an SBA loan?

Licensed professional practices and asset-heavy businesses sit at the bottom of the charge-off rankings. Veterinary practices came in at 2.31%, dental offices at 2.99%, and hotels and motels at 2.93%. Lessors of real estate charged off at 2.40% across 2,839 resolved loans.

What these have in common is steady demand and something solid behind the loan. Demand for vet care tends to hold up when the economy slows. A hotel loan is usually backed by the building. A dental practice has patients who come back on a regular schedule and a license that limits new competitors.

At the sector level, health care and social assistance came in at 5.24% and finance and insurance at 4.72%. Low risk is not no risk, though. Even in the safest industry on the list, some owners lost the business and still owed on the guarantee.

Does loan size or deal type change your odds?

Yes, and by a lot. Of loans approved in FY2010-2026, 5.9% of those under $50k had been charged off as of Mar 31, 2026, compared with 0.7% of loans of $5M and up. Small loans tend to go to newer businesses with thin cash reserves and little collateral.

Buying an existing business also helped. Among FY2018-FY2019 approvals, business-acquisition loans charged off at 6.88%, against 9.83% for other 7(a) loans. A going concern comes with customers, staff and a track record, which is easier to underwrite than a startup forecast. Those cohorts are still partly open, so treat the gap as a direction rather than a final score.

Timing matters too. Loans approved in FY2010 charged off at 9.38%, while FY2013 loans came in at 6.27%. You cannot pick your economy, but you can build a cushion into the deal.

How should a buyer or franchisee use these rankings?

If you are buying a business, the industry rate is your starting point, not your answer. A remodeling company with long-standing commercial clients and a full backlog is a different bet from one that lives on walk-in homeowner jobs. Use the ranking to decide how hard to dig, then test the specific business against it.

Look at the longer history too. Over FY1992-2026, residential remodelers charged off at 22.2% of resolved loans and full-service restaurants at 18.5%. Those longer windows include the Great Recession, so they show what a bad cycle can do to a fragile industry.

In a high-risk field, ask the seller for several years of tax returns, not just a broker summary. Check how much revenue comes from the top few customers. Find out whether the lease can be assigned to you, and on what terms. And if the seller will not carry any of the price, ask yourself why.

Franchise buyers should compare their brand with the industry baseline. A brand that runs well above its own category is telling you something the sales deck will not.

What to do if your industry ranks high

A high rate does not mean you should walk away. It means your loan terms carry more weight, because you are more likely to need them. Before you sign, work through these:

• Borrow working capital with the loan, not just the purchase price. Many failures start as a cash crunch in the first year, not a bad business.
• Read the personal guarantee line by line. Find out whether it is unlimited, whether your spouse must sign, and whether your home is pledged as collateral.
• Match your lease to your loan. A long loan on a business with a short lease leaves you exposed if the landlord will not renew.
• Check what counts as a default. Missing a payment is obvious, but some notes also treat a change in ownership, a lien, or a drop in financial condition as a default.
• Ask about the variable rate. If your rate floats, run your cash flow at a higher payment before you commit.
• If you are buying a business, ask the seller to carry part of the price as a seller note, so they share some of the risk if revenue drops after closing.

Sources and method

Every number on this page comes from the sources below, each opened and read on or before October 18, 2026. A second, independent review checked every figure against its source and corrected anything that did not match. Figures that could not be confirmed were left out.

1. CT Acquisitions, SBA Loan Default Rates by Industry 2026: Charge-Off League Table from 15 Years of 7(a) Data (computed from SBA 7(a) FOIA files as of Sep 30, 2025) (July 2026 (last verified July 2026; page modified October 14, 2026))
2. SBA Loan Index (Mario Bailey), SBA Charge-Off Rate Benchmarks: 919,729 Loans by Industry, Size, State & Vintage (SBA FOIA 7(a) and 504 data, as of 2026-03-31) (Published July 4, 2026; updated July 11, 2026)
3. Forvis Mazars, How to Avoid a Charge Off on Your Next SBA 7(a) Loan (September 2022)
4. Finance Clearly, SBA 7(a) Charge-Off Rates by Franchise Brand, Industry and State (FY1992-2026, CC BY 4.0) (August 24, 2026 (initial publication))