How do you find the best Small Business Administration (SBA) lenders? Here’s our guide to finding the top SBA loan lenders online.
We’ll cover the basics of what SBA loans are, how the lending process works and what to look for in a lender before we review a list of some of the best lenders for SBA loans you can find online.
What Is an SBA Loan?
The SBA’s loan programs are designed to make it easier for small businesses that have difficulty qualifying for standard bank loans to obtain financing. SBA-participating lenders agree to abide by the SBA’s guidelines, which set limits on interest rates and fees.
In return, the SBA agrees to guarantee part of loans extended by SBA-certified lenders in the event the borrower defaults. This reduces risk to lenders, making it easier for them to extend financing to borrowers who otherwise might have difficulty qualifying. Because of this reduced risk, SBA loans represent some of the best rates on the market. Also, they can be easier to qualify for than some other loan products.
How Do SBA-Approved Lenders Work?
The SBA doesn’t extend loans directly. Instead, you go through the loan process with approved SBA loan providers using a process similar to that you would use to apply for other loans:
- First, you should check your eligibility, which includes considerations such as whether your business fits a category that qualifies for an SBA loan, whether your credit score is high enough and whether you can offer collateral and a personal guarantee
- Second, you will need to locate an SBA-approved lender
- Third, you must collect the paperwork your lender requires, such as financial statements and tax returns
- Next, you will submit the required SBA forms, along with any other required paperwork
- Finally, if your lender approves your loan, you must sign the closing paperwork
The amount of time this process takes can vary, but normally, you should expect it to take 60 to 90 days. The process can go faster if you’re working with an SBA-preferred lender, meaning that the lender is authorized by the SBA to approve loan applications on their own without having the SBA directly clear the decision. Nonpreferred lenders must submit applications for direct SBA approval, lengthening the time involved.
What Should Look for in SBA Loan Lenders?
How can you identify the best banks for SBA loans when looking for lenders online? When considering lenders, there are a number of criteria you can use to evaluate prospective providers:
- Are they a preferred lender?
- What types of SBA loan products do they offer?
- What loan amounts do they offer?
- Loan terms: What do they offer?
- What are their interest rates?
- What qualifying criteria do they require?
- How easy is their loan application process?
- What type of loan turnaround time do they advertise?
- What do online reviews say about their services?
- Do they have branch locations in your area?
Considering these types of criteria can help you narrow down a list of prospective lenders and find a lender who can meet your needs. Depending on your needs, some criteria may be more important than others. For example, if you need a loan quickly, a preferred lender may be able to process your application faster.
5 Top SBA Lenders
To help you speed up your search for a lender, we’ve put together an SBA lenders list of leading online providers drawn from the SBA’s list of most active lenders for its SBA 7(a) loan program, as ranked by volume measured in terms of the amount approved, updated for fiscal year 2021 through June 30, 2021.
Here are 5 top providers to consider when looking at lenders:
- Live Oak Banking Co.
- Huntington National Bank
- Celtic Bank Corp.
- Byline Bank
- Wells Fargo Bank, National Association
Let’s take a look at some highlights from each of these lenders.
1. Live Oak Banking Co.
Live Oak Bank currently is the SBA’s largest lender in terms of total dollar amount approved. An SBA preferred lender, they offer SBA 7(a) and SBA 504 loans. They digitally serve borrowers in all 50 states, but do not have a local branch presence outside their headquarters in Wilmington, N.C., in contrast to some of the other lenders covered here.
For 7(a) loans, Live Oak Bank offers amounts up to $5 million, with repayment terms of up to 25 years, varying interest rates, typical down payments of 10%, 20% personal guarantee requirements with minimal collateral and no prepayment penalties for loans up to 15 years. For 504 loans, they offer amounts up to $15 million with fixed or floating interest rates and typical down payments of 10%.
2. Huntington National Bank
The top regional SBA lender in an area stretching from Illinois to Pennsylvania and the nation’s largest SBA 7(a) loan originator by volume, Ohio-based Huntington National Bank offers a variety of SBA loan products. These include SBA 7(a) loans, 504 loans, SBA Express loans and a loan product called Lift Local Business loans geared toward women, veterans and racial and ethnic minorities. Limits, terms and rates vary by product.
3. Celtic Bank Corp.
Utah-based Celtic Bank is an SBA-preferred lender that offers several SBA loan products. For SBA 7(a) loans, Celtic provides amounts up to $5 million with terms up to 25 years and rates as low as prime plus 2.75%.
Celtic’s SBA Express Loan product features up to $150,000 with terms up to 10 years and rates at or below prime plus 2.75%. The bank’s SBA 504 loans offer amounts up to $5 million with terms up to 20 years at long-term fixed interest rates. Celtic’s site includes user-friendly online tools you can use to estimate loan down payment and monthly payment amounts.
4. Byline Bank
Chicago-based Byline Bank is the top SBA lender in Illinois and Wisconsin. An SBA-preferred lender, their loan products include SBA 7(a) loans, SBA 504 loans and SBA CAPLines geared toward businesses with cyclical needs, in addition to loans for rural businesses from the U.S. Department of Agriculture called Business and Industry (B&I) loans.
Byline’s SBA 7(a) loans are available in amounts up to $5 million, with terms of up to 25 years for real estate loans and 15 years for other loans. Their SBA 504 loans are available with fixed-rate interest rates for loans between $1.5 million and $10 million, with terms of up to 25 years for real estate and 10 years for machinery and equipment. CAPLines loans are available for amounts up to $5 million for terms of 12 months to 10 years.
5. Wells Fargo Bank, National Association
California-based financial services provider Wells Fargo is an SBA-preferred lender that offers SBA 7(a) and SBA 504 loans. Both loan products are geared toward the long-term financing needs of businesses with net worth below $15 million and average net income below $5 million. Loans are available in amounts up to $5 million with either fixed or variable interest rates, with terms up to 25 years for commercial real estate loans and up to 10 years for other loans.
For 504 loans, amounts are available up to $6,500,000 for the portion guaranteed by Wells Fargo and up to $5 million for the portion guaranteed by a Certified Development Company. (This is a nonprofit certified by the SBA which promotes economic community development.) Interest rates may be fixed or variable. Terms are up to 25 years for commercial real estate loans and up to 10 years for machinery and equipment loans.
Find Out if You Prequalify for the Best SBA Lenders
SBA loans are backed in part by the U.S. government. They allow lenders to extend financing to small business owners who might have difficulty qualifying for standard bank loans. The application process works similar to other loans, involving the submission of paperwork along with forms required by the SBA. The best providers are led by SBA-preferred lenders such as those listed above.
To find the best lenders, the first step is to find out if you prequalify. We provide a simple online prequalifying form to help you evaluate your eligibility for SBA loans and other business financing options. If you prequalify, we can help connect you with a network of SBA lenders. Take a few minutes to fill out our free no-obligation form and find out what financing options may be available to you.