Commercial Mortgage Insider Blog

Picking the RIGHT SBA Lender

The top 100 SBA lenders are diverse in terms of their capabilities, sizes, and specializations. They constantly evolve, with new lenders entering the scene and others exiting. K2 Commercial Finance works with many preferred lenders, demonstrating a tailored approach to choosing lenders based on the unique needs of each project.

Here's the process:

Understanding the SBA Market: The top 100 lenders made up 74.3% of all SBA 7(a) loans in fiscal 2024, out of 1,473 lenders. Experienced lenders are preferred, much like choosing a skilled surgeon.

Diversity Among Lenders: The top 100 lenders vary widely; this year saw 15 new lenders. Lender preferences change over time based on their credit appetites.

Deal Size Specializations: Lenders specialize in different deal sizes, from as low as $113,257 to as high as $2.6 million. Smaller deals are often SBA Express loans, while larger ones tend to be real estate transactions.

Geographic Reach: Some lenders operate in only a couple of states, while others lend nationwide. The median reach is 19 states.

Types of Lenders: The list includes FDIC-regulated banks, private lenders, and credit unions. Private lenders are more flexible with risky deals, while FDIC-regulated banks vary greatly in size, from $160 million to $3.5 trillion in assets.

Accessing this information involves using publicly available SBA data and leveraging specific algorithms to identify the best lenders for each project.

SBA ANNOUNCES 2024 7(A) GUARANTEE FEE — EFFECTIVE 10/01/2023

SBA has announced its Guarantee Fee and Lender’s Annual Service Fee for the fiscal year beginning on October 1, 2023.

The fees are effective for all SBA 7(a) loans approved between October 1, 2023 and September 30, 2024. All fees are based on the gross loan amount.

This new fee structure is good news for borrowers with loan requests under $1,000,000. Please contact your Account Executive to run your loan numbers.

The following is a summary of the fees. A link to the SBA Information Notice is provided below.

Guarantee Fee For loans of $1,000,000 or less: 0.00%

For loans of $1,000,001 to $2,000,000: 1.45% of the guaranteed portion of the loan up to and including $1,000,000, plus 1.70% of the guaranteed portion of the loan over $1,000,000

For loans of $2,000,001 and greater: 3.50% of the guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of the guaranteed portion of the loan over $1,000,000

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Harder for Borrowers to Secure a Loan in February, Credit Availability Hits Multi-Year Lows

We are just at the beginning of the reset in the market. A decline in credit availability is just the tip of the iceberg. With the recent blow up in small banks and now spreading to some large institutions, look for credit availability to continue to decline. In the short term, real estate closing volumes will decline, but the real pain will be in the long term with a substantial reset in prices as credit continues to dry up which will ultimately lead to a cooling economy.

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Why are SBA loans more important than ever for small businesses?

Approval rates - Recent bank collapses alongside another increase in interest rates continues to shift the industry to increasingly stringent lending standards. With higher credit requirements, fewer businesses will qualify to obtain a loan in the full requested amount. As lenders slow their loan approval rates, small businesses may need to wait longer to receive any loan amounts for which they receive approval.

Credit Cards Average 20% interest - Credit card interest rates have reached an average of 20%. Since most credit cards have a variable interest rate, yesterday’s rate increase directly impacts credit card interest rates. 20% rates reflect an all-time high from March 2022, when the rates hovered at 16.25%. For small businesses that have relied upon credit cards, the interest rate on the cards creates an even larger challenge for businesses that struggle with cash flow.

Inflation Challenges - The Fed’s decision to raise interest rates yesterday is an indication inflation is still a major factor with which to contend. Keeping business growth in pace with the rate of inflation has been exceptionally difficult. Owners would need to grow business profits by 6.0% annually to match inflation rates. For those whose businesses have not grown as rapidly, owners are left to cover the additional cost of goods.

To face adverse market conditions, business owners are urged to secure capital before they need it. SBA loans offer a haven to entrepreneurs. Since SBA loans’ underwriting and credit requirements do not shift with market conditions, they continue to provide the lowest interest rate loans with low monthly payments.

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Small Business Loan Approvals at Big Banks Slip to 14.2% in February 2023

According to the latest Biz2Credit‘s Small Business Lending Index, small business loan approval percentages at big banks slipped again in February, falling from 14.4% in January to 14.2%. This marks the ninth consecutive month in which big bank approval percentages have declined. Meanwhile, approval rates of business loan applications at small banks also dropped in February to 21.3%, down one-tenth of a percent from 21.4% in January 2023.

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EIDL Loans are an IOU to the U.S. Government

Last month, the Wall Street Journal published an article titled "Pandemic Loans Are Coming Due, But Some Businesses Aren't Ready to Repay." As those payments come due, some business owners argue that they did not understand the terms of the loans and that as the economy weakens, they are not well positioned to repay the loans. Business owners must understand that these loans are an IOU to the U.S. government.

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How to Get Your Mortgage Approved While Working as a Freelancer

The key to being approved for a mortgage as a self-employed individual is to provide the bank with ample evidence regarding your financial stability. Being the expert in mortgages, K2 Commercial Finance will provide you with all the information about mortgage options at your disposal and how to deal with lenders.

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Commercial Mortgage, Hard Money Loans, SBA Loans, Stated Income Commercial Loans

Get Fast Commercial Mortgages on all property types. SBA Loans and Stated Income Loans are our specialty. NO Upfront Fees.

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Commercial Real Estate Lending Surges in Q3!

Commercial real estate lending activity surged in the third quarter of 2021, reflecting a healthy rebound of property acquisitions activity, according to the latest research from CBRE.

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CRE Prices hit all time highs!

The Green Street Commercial Property Price Index increased 0.4% in October, continuing a run of all-time highs, the Newport Beach-CA advisory firm reported Thursday. The all-property index has increased 18% this year and is now 9% higher than it was before the pandemic.

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