In this paper, we seek to evaluate the effectiveness of a novel forward-looking sonar system with a limited number of beams for collision avoidance for small autonomous underwater vehicles (AUVs). We present a collision avoidance strategy specifically designed for a novel forward-looking sonar system based on posterior expected loss, explicitly coupling the obstacle detection, collision avoidance, and planning. We demonstrate the strategy with field trials using the 690 AUV, built by the Center for Marine Autonomy and Robotics at Virginia Tech, and verify the forward-looking sonar system using a prototype sonar with nine beams. Post-processed simulations are performed while changing parameters in the sensitivity of the system to demonstrate the trade-off between the detection and false alarm rates.