What is the Best SBA Lender to Get an SBA Loan
Are you looking for the best SBA lender or the top SBA bank? Who is the best SBA lender? What are the most active SBA banks? Where is the best place to get an SBA loan?
There is no such thing as a " best SBA lender."
Each bank or lender makes credit decisions based on a specific criteria set forth by one or more management entities including the chief credit officer, members of the credit committee or even the entity that owns the bank. Did you know there is no minimum credit score requirement set by the SBA? Credit criteria is determined by the bank’s credit requirements. Most likely, the credit decision is based upon your credit character and not your credit score.
There may be a small bank cranking out approvals for SBA loans — as they should — only to be purchased by a more conservative bank which decides to tighten the credit criteria. As a consumer, you will not know this unless you dig deeply into the management structure and ownership of the bank.
A better search criteria would be the most active SBA lenders. These are the lenders actively involved in underwriting and approving SBA loans. But wait, the “most active” status may include SBA loans from $25,000 (and less) to $350,000. These loans are approved by a much less stringent underwriting process and therefore, are much easier to obtain than say, a $1.7 million loan to buy an existing business.
Let’s look more in detail at the differences and nuances of some of the top SBA lenders and most active SBA banks.
Many of the banks you see on the corner of busy intersections with nice, big, fancy buildings are very active SBA lenders. They approve small business loans like small factories based on the creditworthiness of the borrower, or loan guarantor. But … did you know? … they approve these loans as if they are conventional bank loans. In other words, they do not factor in the additional layers of protection they receive for 70% to 90% of the loan from the SBA loan guaranty program. This is good for people with excellent credit. This is not good for people looking to buy an existing business because very few of these loans are approved when the loan is used for goodwill, or, the “airball” or intangible portion of the loan. The biggest, most active SBA lenders might not consider the SBA loan guaranty in their credit approval process
Some advantages and disadvantages of dealing with “most active” or “best” SBA bank of lender:
|Many loan approvals between $25,000 and $350,000
|Fewer approvals for large loans used to buy existing businesses
|Good for people with excellent credit, no personal history issues, high net worth
|Stricter credit criteria because they are underwritten like a conventional small business loan
|May offer better interest rates and better loan terms
|If you are banking with them now, expect to sign a restrictive covenant giving the bank power over your bank account you may not like
What about the personal introduction you get from your business advisor to the “guy that approves any SBA loan?”
Well, let’s take a look at a few things he may not know and you certainly won’t find out until about 60 days into the underwriting process. Did I say 60 days? Yes, but that’s a topic for a different article so be sure to sign up for our information-only emails at the end of this article.
Here are actual credit criteria from some of the most active national SBA lenders we deal with on an hourly basis:
- We are a national lender but we only deal with states which have ocean shoreline.
- We will lend only if the discounted collateral is 1.5 times the loan amount.
- We used to like [insert: restaurants, hotels & motels, energy-related] but we now have a large number in our portfolio so we are now concentrating on [insert: senior living facilities, funeral homes, medical].
- Our new credit officer has had several bad experiences with [insert: business acquisitions, family entertainment, gas stations] so we no longer lend for those types of loans.
- Some bad press on senior management led one bank to go from almost $100 million a year in SBA 7(a) loan approvals to about $0.
- We’ve been purchased by a credit union and they’re much more conservative with credit decisions. (From a bank that was on the top 100 most active SBA lenders from the SBA.)
The takeaway: It’s important that you don’t get sucked into the bank runaround.
Even the biggest, best, most active SBA bank or lender can take your exciting project and ruin it. YourEdge™ by YourSBA.com is the only bank-independent SBA lending platform in the country. YourSBA.com reviews each loan request and applies algorithmic intelligence (AI) to make sure it gets to the right lender. This gives you the highest chance of a loan approval with the lowest interest rate and best loan terms eliminating fees charged by brokers and preventing the bank-runaround.
A pre-qualification is a great way to get a headstart on your application and will help in your negotiations. There is no credit check required and you’ll receive your pre-qualification letter and borrowing estimate within 24 hours.
HOW DO I GET STARTED?
The best online SBA loan platform is YourEdge™ by YourSBA.com:
- Get prequalified to buy a business within 24 hours
- Start here with YourEdge™
- Find out how much you may qualify for using our SBA Loan Calculator tools here.
- Business acquisition loans from $350,000 to over $5 million.
- 5x success rate of your bank
- No fees
- No credit check / No hard credit pull
- No bank runaround
- Online, streamlined application accepted by all of the most aggressive SBA lenders for competitive interest rates and a 95% success rate.