Top SBA Lenders: How to Find the Best SBA Loan for Your Business
Rates & Fees listed in this piece are accurate as of the date of publishing.
The U.S. Small Business Administration is an organization that secures loans made to small businesses. These loans can be used for a variety of purposes, such as working capital, to purchase equipment, or even to buy another existing business. The SBA secures the loan to help protect lenders in case a borrower defaults on their loan. These loans can be used by entrepreneurs getting their business off the ground, or for businesses that already have a long history.
Top SBA lenders
A 7(a) loan includes everything from the standard 7(a) loan to the international trade loan. The following are the top 7(a) lenders by approval amount:
Live Oak Bank
Live Oak Bank lent $1,033,019,600 through the first quarter of 2018. With 691 loans made during that time, Live Oak Bank extended an average of $1,494,963 per loan. Besides its business loans, the bank also offers a variety of business-focused products, such as savings accounts and certificates of deposit.
Wells Fargo Bank, National Association
Wells Fargo Bank lent $926,898,000 through the first quarter of 2018. The bank made 2,859 loans during that period, or $324,203 per loan. As a long-established banking institution, Wells Fargo offers a broad range of business services, such as payroll and benefits management, numerous financing options and support for payment processing.
Huntington National Bank
Huntington National Bank lent $628,563,700 in the first quarter of 2018. After extending 3,484 loans, the bank extended an average of $180,414 on each loan. Besides small business loans, Huntington also offers businesses lines of credit, management of payables and receivables and business checking accounts, among other services.
JPMorgan Chase Bank, National Association
JPMorgan Chase Bank lent $472,327,000 in the first quarter of 2018. With 2,014 loans made in that time, the bank extended $235,018 on average. As a prominent lending institution, it provides a variety of services, like asset-based lending, equipment financing, payment processing and more.
Byline Bank lent $403,998,500 in the first quarter of 2018. The bank made 348 loans, or an average of $1,160,915 per loan. In addition to the SBA loans it extends, Byline Bank also operates business accounts and participates in the USDA Business and Loan program.
The 7 types of SBA loan programs
The SBA operates loan programs that can fund the purchase of inventory, act as working capital, or even be used to support export sales. Some loans are broad and can be used for a variety of purposes, while other loan types are designed for specific operations. The standard 7(a) loan program is the most commonly used program, but borrowers can take advantage of several other loan types that are better suited for their purposes.
Interest rates on SBA loans are negotiated between the lender and borrower. However, these rates cannot exceed the SBA interest rate maximums. Generally, on fixed rate loans of $25,000 or less, the maximum rate is the base rate, plus 4.75%. On loans of between $25,000 and $50,000, the maximum rate is the base rate, plus 3.75%.
Finally, on loan of $50,000 or more, the maximum rate is the base rate, plus 2.75%. Variable rate loans may have a broad range of interest rates charged, so it’s best to consult with your lender about the changes.
|SBA loan programs at a glance|
|SBA Loan Type||Loan Amount||Fees||Best For|
|Standard 7(a)||$5 million||2 to 3.75% of guaranteed portion||Large purchases of equipment and inventory, real estate purchases and business acquisitions|
|7(a) Small Loan||$350,000||2% of guaranteed portion||Working capital, inventory and equipment purchases|
|SBA Express||$350,000||Zero with zero subsidies||Working capital, inventory and equipment purchases|
|Export Express||$500,000||Zero with zero subsidies||Export sales and additional working capital for export sales|
|Export Working Capital||$5 million||2 to 3.75% of guaranteed portion||Export sales and additional working capital for export sales|
|International Trade||$5 million||2 to 3.75%||International trade and export sales businesses that are looking to expand|
|504 Loan||$5 million||Variable||Renovation, modernization and both building and land purchases|
Standard 7(a) loan program
The standard 7(a) loan program can be used to purchase inventory, equipment, buy another existing business, as working capital, to construct new buildings or renovate old ones, or to fund a new business. The loan can be in an amount as small as $500 to as high as $5.5 million. Interest rates are negotiated between the lender and borrower. Banks set a base interest rate, then an additional maximum of 4.25% is charged on loans of $25,000 or less. The maximum rate declines with larger amounts loaned.
7(a) small loan program
The 7(a) small loan program is a variation of the standard 7(a) with a much smaller limit of $350,000. It can be used for all of the same purposes as the standard 7(a) loan. However, its smaller size makes it more appropriate as working capital or to purchase inventory and equipment. The maximum rate declines with larger amounts, as with the standard 7(a) loan.
SBA Express loan program
The SBA express loan is a type of 7(a) small loan with an accelerated approval process that occurs within 36 hours. It can be used for all of the same purposes as the standard 7(a) loan, but its smaller size makes it more suitable as working capital or for the purchase of inventory and equipment. As with the standard 7(a) loan, the maximum rate the SBA attaches to the base interest rate declines with higher loan amounts.
Export Express loan program
The export express loan feature an accelerated turnaround time, but is meant specifically for exporters whose profits are on export sales. The loan’s higher amount of $500,000 means it can be used for any purpose that supports such sales. During the application process, organizations have to show that the loan will explicitly support export activity. Consistent with the standard 7(a) loan, the maximum appended interest to the base rate goes down with larger loans.
Export Working Capital loan program
An export working capital loan is a less speedy version of the export express loan with a much higher loan limit of $5 million. As with the traditional export express program, organizations taking out an export working capital loan have to show that the loan will explicitly support their export operations. The maximum additional interest on the base rate goes down, as with all forms of the 7(a) loan.
International Trade loan program
An international trade loan is also for trade businesses. However, this loan is meant for export businesses that are expanding. The higher loan amount of $5 million can help organizations when import competition is hurting their business or to modernize to meet the efforts of foreign competitors. As with all forms of the 7(a) loan, the maximum added interest goes down when the loan amount is higher.
504/CDC loan program
The 504 loan program was created to give businesses a different method of financing their operations and growth. Financing from the program is typically used to acquire assets that can help a business expand or modernize. The funds can also be used for building purchases or to buy land. As an SBA program, a 504 loan has a maximum loan amount of $5 million. There is no static interest rate. Instead, the rates are set by five- and 10-year market rates.
The bottom line
There are multiple loan programs that can be used for a variety of purposes. The 7(a) program is the most flexible program and can be used for a variety of purposes. Meanwhile, programs like the express export and international trade loan are better suited for exporting businesses. Finally, the 504 program is best for financing asset purchases, renovations or real estate investments. You can work through one of the country’s top lenders to find which loan is right for you.