Where do SBA Lenders have wiggle room to negotiate?

May 03, 2024

by a searcher from Lousiana State University in Houston, TX, USA

What areas can buyers negotiate with SBA lenders on 7a loans? Rates, fees, term, interest only periods, covenant holidays, etc.?

How much wiggle room is there to negotiate on interest rate spreads usually? Do lenders typically put their best foot forward on the term sheet or expect to come down after negotiation?

Is there a good website that shows an index of where SBA lenders are landing on rates?

Would love any recommendations.

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I would concur with Alan and Joe above, the standard terms of an SBA 7A loan are non-negotiable. That is term, SBA fees, collateral requirements, prepayment penalties, etc. The items you can negotiate are the loan amount (building in working capital, the amount down so long as you have a seller note on standby, etc.), the interest rate, when payments will be made, interest only period, etc. In general there is typically room to negotiate on an initial quote from a lender, but it really depends on how strong the deal is for the Bank. Loans with more hard collateral or real estate involved typically see better interest rates then those that are all goodwill backed. Deals with less cash down typically see higher interest rates because they are deemed higher risk.

Happy to discuss options at any time. You can reach me here or directly at redacted Good luck.

Reply by a searcher
from Miami University of Ohio in Lexington, KY, USA

My experience was the clearly defined SBA guidelines are non negotiable. The interest rate is somewhat negotiable depending on appetite of the lender. The lender I used doesn’t sell off the loans and keeps them on the books so they were willing to put fewer points on top of the prime rate than industry standards. I was able to negotiate a three-year fixed term and floating after. Wiith rates high right now they were proposing a longer fixed period. I found through the process that if you had good reasoning for while you were requesting a change to their SOP (not SBA), then they usually would work with you. Also recommend finding a BDO who understand their bank and can advocate for you because they’re incentivized to get the deal done since essentially they’re in sales and want to close the deal. Happy to introduce you to who I worked with. The process wasn’t perfect and every bank has their nuances and problems but at the end of the day they got the deal done and that’s all that matters.

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