Before you choose the best SBA loans for your business, you need to be aware of SBA lenders. These lenders offer loans when the government offers them backing related to payment risk. The government created these loan programs for small businesses to have access to the necessary flow of money. These lenders provide these loans through the Small Business Administration.
In this article, you will learn about the best SBA lenders whom you must choose if you are applying for small business loans. However, before that, we will discuss some of the general details of SBA lenders. Apart from that, we will also share with you some of the significant pros and cons of availing loans from SBA lenders. Hence, to learn more, read on through to the end of the article.
What Are SBA Lenders?
According to Investopedia,
“While there is no shortage of lenders offering private commercial loans, perhaps the most coveted form of business financing is the family of loans backed by the U.S. Small Business Administration, or SBA. That’s because SBA loans offer better rates, lower fees, longer terms, and more flexible qualification terms and down payments.”
Once you apply for a loan to the SBA, the SBA will not lend directly to you. Instead, an SBA-approved lender will offer you the loan. It can be a bank or even a microlending institution. Hence, each SBA loan has to go through two approvals -first from the SBA and then from the lending institution.
The SBA (The United States Small Business Administration) offers security against these loans that the lenders provide borrowers. If a borrower becomes a defaulter for the loan, the SBA provides help to the lender to get back the money.
In general, SBA lenders constitute banks, credit unions, and other lending institutions. Hence, there are different types of SBA loan packages. Here, each SBA lender offers different kinds of loans.
SBA Lenders: Here’s What You Need To Know
When a lender gets the “Preferred Lender” status from the SBA, it gets the authority of the SBA to make final credit decisions on SBA-guaranteed loans.
NerdWallet claims –
“The best SBA 7(a) lenders will have an established history of issuing these loans with the streamlined application process and dedicated loan specialists to show for it. These lenders are often members of the Preferred Lender’s Program or PLP. SBA preferred lenders can make final credit decisions without sending applications to the SBA, allowing them to speed up the loan approval timeline.”
What Are Preferred SBA Lenders?
Apart from that, as a part of the PLP, those SBA lenders also approve large volumes of SBA loans. Additionally, they can also bypass direct SBA approval in a variety of cases. As a result, it helps in speeding up the loan approval process. Such a factor gives the lender the ability to handle more approvals.
One of the most popular SBA loans is the SBA 7(a). In this case, some of the most popular lenders are Funding Circle, United Midwest Savings Bank, Bank of the West, JP Morgan Chase, and Live Oak Bank.
The Best SBA Lenders To Know In 2024
The following are some of the best SBA lenders that you need to choose in 2024:
1. Live Oak Bank
Live Oak Bank is one of the biggest lenders of SBA 7(a). They also offer a variety of small business financing, competitive rates, solid online experience, and also good availability.
| Pros | Cons |
| Offers different types of loans The commercial bankers are highly experienced in different industries One of the biggest lenders of SBA 7(a) loansAvailable across all fifty states | There are no physical branches of the bank They lend only to businesses in their target industries |
2. JP Morgan Chase
It is one of the largest banks in the nation and has thousands of branches across the country. If you want the best in-person experience, JPMC is the best one you can choose.
| Pros | Cons |
| Thousands of physical branch locations in 48 states You can avail of very large loans under the SBA 504 program Excellent reputation for years as a safe bank It also offers SBA Express Loans | You will be competing with more applicants for the loan since most will apply for JPMC The loan process is not online |
3. United Midwest Savings Bank
You will get SBA loans up to $150,000 with the United Midwest Savings Bank. Apart from that, due to its nationwide coverage, this bank is one of the top choices for SBA loans.
| Pros | Cons |
| Contains a separate program for SBA loans for up to $150,000Available in all the fifty states in the US You can complete the application easily and securely | You can only for a single loan program Loans above $150,000 are not available. However, it is available for SBA/USDA combined loan Branches are only available in Ohio |
4. Funding Circle
It comes with a wide network of lenders. Hence, this lender is one of the best choices if you really want quick access to a small business loan.
| Pros | Cons |
| The loan amount cannot be more than $500,000 Physical locations are present only in Denver Not available in Nevada | The loan amount cannot be more than $500,000 Physical locations are present only in Denver Not available in Nevada |
5. Bank Of The West
This bank offers SBA 7(a) loans up to $5 million and SBA 504 loans up to $15 million. When it comes to loans of large amounts, no one comes close to the Bank of the West.
| Pros | Cons |
| Offers loans of large amounts One of the best interest rates Have branches in 19 states | You cannot get a loan below $50,000 Loans are available mostly to states that are West of the Mississippi Online application unavailable |
Wrapping Up
Hope this article was helpful for you in getting a better idea of the best SBA lenders. However, before you choose one of these lenders, consider going through the pros and cons carefully.
Do you have some more options to suggest? Consider sharing them with us in the comments section below.
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