Finding the right SBA lender

investor profile

September 19, 2023

by an investor from Columbia University - Columbia Business School in Seattle, WA, USA

Curious how everyone went about finding the right SBA lender and what the most important criteria was. More specifically, have the following questions:

- Is there an advantage to working with locally based lender vs. national one? Would love to hear stories either way.
- Did you see big variation of rates? I know there's a cap of prime rate + 3% but wondering how much variation there is between the lenders, assuming the business is deemed relatively safe (e.g. consistent EBITDA, DSCR of 1.5X+, non-seasonal, etc)
- At what stage of the process did you start sharing details of the business (sharing financials, tax returns, etc)? Pre-LOI? Post-LOI? I'm trying to share details as soon as I have a deal that I wanna submit LOI for, but don't want to speak to too many banks.
- Other important things to look for when it comes to SBA lenders?

Thank you!

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I concur with Sarah, You do not want to rely on one lender. Although the Standard Operating Procedure for the SBA is set, all lenders have their own requirements that are stricter than what the SBA will allow. Also, some lenders will not lend to certain industries or are more restrictive of the terms they will offer on certain industries, some lenders will limit the amount of goodwill exposure they take on deals, and some do not lend in all markets. So you need to find the lender that will be best suited for your particular transaction.

Just about any financial institution can do an SBA 7A loan, but you want to be sure you end up with a lender that is a Preferred Lender Partner (referred to as "PLP Status") with the SBA. With PLP status once the loan is approved by the lender it is already approved with the SBA. The lender just has to pull an authorization and verify there is no cross-exposure with the SBA or that you have not been banned from borrowing money from the government. If you go with a lender that is not a PLP lender, then once they approve the loan they will then need to submit the loan to the SBA for the SBA to approve it directly as well. This will add time to the process. Also, non-PLP lenders tend not to be as experienced as PLP lenders, which can add to further delays in getting a deal closed.

In case you are interested, we are a Commercial Loan Brokerage shop and we have over 500 funding partners including over 50 SBA funding partners for the exact reasons I described above. If you need assistance looking for your options we would love the chance to assist you. You can reach me here or directly at redacted Good luck with your search.
commentor profile
Reply by a lender
from University of North Carolina at Wilmington in Wilmington, NC, USA
Definitely reach out to 3-4 SBA lenders. The right lender can be for a variety of reason and can also be deal specific. Live Oak is the largest SBA lender nationwide but our credit box might not work for every opportunity! Reach out to ^redacted‌ and me at redacted to learn more. You should start building relationship early, definitely pre-LOI so you can learn how each bank thinks and feels about your search strategy.
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