Top SBA Lenders
The Small Business Administration (SBA) offers a loan guarantee program to approved lenders who offer small business loans. Loans that are approved for the SBA guarantee are loans in which a bank lender provides financing, and the government agrees to cover a large portion of the lenders’ losses should the small business default on the loan. The purpose of the SBA guarantee is to encourage banks and other small business financing companies to lend to businesses – especially those that are borderline bankable. In this article we look at the most active SBA lenders by loan volume and number of total loans provided through the SBA 7(a) and 504 programs.
What is an SBA Lender?
SBA preferred lenders are traditional large and small banks, savings and loans, credit unions, community banks, non-profit lenders and other specialized financing lenders who participate with the Small Business Administration to provide funding structured under 7(a) guidelines. The lenders will enter an agreement with the SBA, and then ensure the Small Business Administration that they would only make the loan with the use of an SBA guarantee.
What is an SBA Guarantee?
The SBA guarantees up to 85% of all SBA loans under $150,000, up to 75% of loans over the $350,000 threshold. The maximum SBA guarantee is $3,750,000 (or 75% of the $5,000,000 SBA loan maximum). When it comes to the SBA Express program, the government will only guarantee up to 50% of the loan amount.
What are the SBA Programs?
- SBA 7(a): Standard and most common SBA loan program used for helping start-up and existing small businesses with a wide variety of uses including working capital, acquisitions and real estate.
- SBA 504: The SBA 504 Loan proceeds can be used to provide financing for major fixed assets such as long-term equipment and machinery, purchasing land or existing buildings, construction of new business facilities, modernizing new buildings
- SBA Express Program: The Express Loan program provides loans up to $350,000 in an expedited manner by having a 36 turnaround by the SBA before funding
- Caplines: The Caplines program is the SBA’s unbrella program for short-term business financing. Capital options include a seasonal line, contract line, builders line, asset-based line and small asset-based line.
- Export Working Capital Program: Export Working Capital Program loans are for businesses with export sales in need of working capital to help with the export process.
SBA Rates and Terms
|SBA 7(a)||8.25%||Up to 25 years|
|SBA 504||4%||Up to 20 years|
|SBA Express||8-10%||Up to 7 years|
|SBA Microloans||6-25%||7.75-8.5% years|
How to Apply for a SBA Loan?
For the most part, the SBA loan application process is probably the most cumbersome of all funding options. It usually begins with the lender reviewing the business tax returns and income statements to see if the company has an acceptable debt-service-coverage-ratio (DSCR). Debt-service-coverage-ratio is the ratio of business cash available to pay off its debt. An SBA lender will usually look for a DSCR of around 1.1, although there is flexibility in this depending upon the situation. After the DSCR is reviewed, a lender will look at the balance sheets to see if there is sufficient business collateral, and the personal financial statement to see if the business owner also has a strong enough statement showing good personal collateral (as all SBA loans require a personal guarantee). Once a credit check is run on the business, financials are reviewed and other documentation gathered, the lender will then issue a term sheet. After execution of the term sheet (along with paying all fees associated with due diligence) the lender may/will ask for additional documents needed by both the lender, and the SBA. If after the due diligence process everything looks okay, the lender will then move to letter of intent, submit the deal to the SBA for approval and then finally move forward with funding.
SBA Approval Process
1. Provide documentation lender
SBA lenders will require business and personal tax returns, income statements, balance sheets, debt schedules, A/R & A/P aging schedules and personal financial statements.
2. Lender issues a term sheet
If your loan request meets the individual lender requirements along with the SBA requirements, a lender will then issue a term sheet.
3. Due Diligence
When the term sheet is finally signed and executed, the lender will usually require the borrower provide additional documents needed for due diligence and underwriting.
4. Commitment Letter
Once an SBA lender has finished due diligence and underwriting, they will then send the loan package to the SBA for final approval.
5. Get funded
When the SBA finally approves, the lender will then immediately move forward with funding.
Top 20 SBA Lenders by Loan Volume
|SBA Lender||Total SBA Funding ($)|
|1. Wells Fargo||$1,363,161,100|
|2. Live Oak||$945,717,500|
|3. U.S. Bank||$553,639,300|
|4. JPMorgan Chase Bank||$551,564,600|
|5. Huntington National Bank||$458,253,400|
|6. Ridgestone Bank||$299,564,700|
|7. Celtic Bank||$288,813,000|
|9. Compass Bank||$218,109,800|
|10. Seacoast Commerce Bank||$185,997,500|
|11. Stearns Bank||$185,441,900|
|12. SunTrust Bank||$178,135,400|
|13. Regions Bank||$158,390,300|
|14. BBCN Bank||$153,219,600|
|15. TD Bank||$147,014,000|
|16. Manufacturers and Traders Trust||$146,954,500|
|18. Bank of the West||$140,432,700|
|20. Pacific City Bank||$134,363,500|
Source: Top 100 SBA Lenders
Top 20 SBA Lenders by Number of Loans
|SBA Lender||# of SBA Loans|
|1. Wells Fargo||6,587|
|2. Huntington National Bank||2,876|
|3. JPMorgan Chase Bank||2,468|
|4. U.S. Bank||2,395|
|5. Compass Bank||1,328|
|6. Manufacturers and Traders Trust||1,264|
|7. Celtic Bank||982|
|8. Live Oak Bank||779|
|9. TD Bank||777|
|10. Eastern Bank||707|
|11. Stearns Bank||593|
|12. Citizens Bank||536|
|13. Berkshire Bank||501|
|14. First Home Bank||444|
|16. Zions Bank||351|
|20. Ridgestone Bank||290|