Best SBA Lenders: Top 7 Options to Consider in 2023

There are many factors to consider when choosing the right SBA lender for your business. In this review we highlight the rates, fees and terms of each SBA lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.

SBA loans come with lower interest rates and longer repayment periods than other types of funding. If your business is in need of working capital, whether that’s to expand your business or pay for daily expenses, an SBA loan can help meet those needs.

While SBA loans are backed by the federal government, they are not funded by them. Instead they are funded by banks and online lending institutions. Our team of financial experts reviewed and ranked the top online business lenders to help you get funded.

How To Choose the Best SBA Lenders?

Loan Features: SBA lenders offer different types of SBA loans, each with its own borrowing limit and requirements.
Application process:SBA loan applications can be complex, and application processing can take weeks or months, in some cases.
Interest rates and fees: Some lenders will charge origination fees on top of the interest set by the SBA. Affordability was a strong factor we took into consideration.
Qualification process:Though the SBA sets some of the criteria to qualify, lenders can add their own qualifications for things like credit score and time in business.
Customer support:Being able to reach your lender’s customer service team any time, and through a variety of channels, is important.
Online user reviews: We read lender reviews on independent review sites like Trustpilot to see what it’s like to work with them.
Perks and Bonuses: Look for extra service offerings like payment flexibility, advertising transparency, and advanced technology when considering SBA lenders.

What is SBA Lending?

Small Business Administration (SBA) loans are a type of small business funding that will be funded by a bank, alternate lender, or a group of lenders. Each loan is partially backed (up to 85%) by the federal government, but the SBA doesn’t actually fund the loans themselves .

Since the loans are backed by the SBA, though, the lender takes on less risk and is therefore able to offer lower rates. There are many different types of SBA loans available at any one time, each one fulfilling a specific business need.

What Are the Different SBA Loan Types?

SBA Loan Program	Max loan amount	Terms	Interest Rates	Best for
SBA 7 (a) Loans	$30,000 - $5 million	Up to 25 years	Between 2.25% - 4.75% plus base rate	A wide range of operational expenses like business expansion, inventory, staff wages, and debt consolidation
SBA 504 Loans	Up to $5 million	10 - 20 years	2.75% - 6%	For purchase and improvement of buildings, land, and new or existing facilities
SBA Microloans	Up to $50,000	Up to six years	8% - 13%	Small capital expenses (cannot be used to pay existing debt)
SBA CAPLines Loan	Up to $5 million	Up to 10 years	From prime rate plus 2.25%	Seasonal businesses, contractors, and builders
SBA Disaster Loans	Up to $2 million	Up to 30 years	4% - 8%	A business that has suffered physical damage or disaster
SBA Express Loan	Up to $500,000	7 years for revolving line of credit	From prime rate plus 4.5%	Organizations that need fast funding, often within 36 hours
SBA Community Advantage Loans	Up to $350,000	Up to 25 years	From prime rate plus 6%	Mission-oriented businesses in areas traditionally underserved by lenders

SBA Loans for Small Businesses Pros and Cons

Pros

Low interest rates - As SBA loans are backed by the government, lenders see this type of borrowing as low risk. This means you’ll usually find much lower rates than other types of business lending.
Reasonable terms and conditions - Borrowers are often surprised to see just how generous the terms and conditions are with SBA loans. Most can be repaid over a 25 year period and other fees and charges are kept to a minimum.
Business growth - SBA loans have been designed specifically to provide a boost to local economies. This means that any business looking to grow, hire new staff, purchase equipment, or benefit the local community will be more likely to be approved.
More consistent cash flow - Many businesses have uneven cash flow through the year or long payment terms on accounts receivable. SBA loans are perfect to cover gaps in cash flow issues, such as maintaining payroll and other day-to-day expenses while waiting on client payments.

Cons

Tougher eligibility requirements - It’s harder to get your hands on an SBA loan than other types of lending. You’ll need good to excellent credit, strong financial history, and evidence of high income.
High amounts of paperwork - You’ll need to provide a substantial amount of documentation, including tax returns, balance sheets, business plans, and projected revenue. It can take several months to process and approve an SBA loan.

How Do SBA Loans Work

The US Small Business Administration Department doesn’t loan you the money itself. Instead, it sets guidelines for SBA loans and private lenders will work within these when assessing your application.

Up to 85% of the funding will be guaranteed by the federal government, although the exact amount will vary across platforms. Most SBA loans require significant paperwork and extra time to process, so we wouldn’t recommend them for anyone that needs emergency funding.

SBA loans also offer unique advantages when compared to other loans. Not only are the terms competitive, but some loans provide counseling and education to help support your business. Others may have low down payment options or more lenient overhead requirements. SBA loans were designed with you in mind, and they want to help your small business succeed.

How to Apply for an SBA Loan

To apply for an SBA loan, you start by submitting an application to one of the top SBA lenders mentioned above. It’s a fairly straightforward process, and many platforms will be able to present you with various options within minutes of submitting your application.

Here’s how long it takes to get an SBA loan >>

However, to complete the process, you’re going to need to submit a good amount of paperwork, and it could take several months to receive your funding. You should prepare the following documents:

Proof of identity, usually a form of government-issued ID like a driver’s license
Your personal financial information, including several years of tax returns
Business financial information including
Year-end profit and loss statement
Year-end balance sheet
Reconciliation of net worth
Interim balance sheet and profit statement
Projected financial statements
Your business certificate or license
Resumes of all principal owners of the business
Business lease information

These are usually requested as a minimum and there might be additional documentation you’ll need to provide.

SBA Loan Rates for Small Businesses

SBA loans remain popular because the rates are typically much lower than you’ll find with other types of borrowing. While other small business funding can run into double-digit interest, the government has set caps on all SBA loans. For example, the most popular type of SBA product, the SBA 7(a) loan, has rates set at a maximum of 4.75% plus base rate, and many businesses will actually be offered even lower rates than this.

Another great example is a 504 loan, which is used for real estate lending. Rates are capped at 6% with repayment terms set over 25 years. This is much better than you’d find at a number of commercial mortgage providers.

Conclusion

If you’re looking for working capital to invest in marketing, advertising, new hires, or office space, a loan backed by the Small Business Administration can provide you with low interest rates and long repayment terms. If you qualify for an SBA loan, you’ll save significantly over what you’d pay with other types of loans online.

Frequently Asked Questions(FAQ)

What Is a Preferred SBA Lender?

Lenders that have been designated as Preferred SBA Lenders have been approved by the Small Business Administration to give final approval on SBA loan applications rather than funneling them through the SBA to process. Working with a Preferred SBA lender can speed up the application process, cutting down the processing time by as much as several weeks.

What Credit Score Is Needed for an SBA Loan?

Each SBA lender can set the required credit score to qualify for an SBA loan. Generally, you will see credit score requirements of at least 550, and averaging 650. Some lenders may disclose this number, while others may not. Additionally, SBA lenders may look at time in business, annual revenues, and other criteria to determine eligibility.

Can a Startup Get an SBA Loan?

More often than not, a business is required to be in operation for at least two years to qualify for an SBA loan. Because startups don’t yet have a proven financial record, they may be seen as risky and therefore not qualify for SBA loans.

Best small business startup loans >>

What Businesses Are Not Eligible for SBA Loans?

Businesses in certain industries do not qualify for SBA loans. These include, but are not limited to, those involved in lending, life insurance, pyramid sale distribution, those engaged in illegal activity, speculation, lobbying, or consumer or marketing cooperatives. Additionally, to qualify for an SBA loan, a company must be considered a small business as defined by the SBA.

How Long Does It Take to Get an SBA Loan?

SBA loan application processing times vary from one lender to another. Generally speaking, it may take as long as three months to get approved for a loan. Working with a Preferred SBA Lender may speed up the process.

Is it possible to refinance with an SBA loan?

As long as certain conditions are met, it is possible to refinance existing debt with an SBA loan. The purpose of the original loan must have been SBA eligible, and the payment amount of the SBA loan must be at least 10% less than the original loan amount. Borrowers must provide written documentation as to why the original loan wasn’t sufficient.

Is a down payment a mandatory requirement for an SBA loan?

More often than not, an SBA loan does require a down payment. That down payment may vary depending on other factors, as well as how much you plan to borrow, but plan to have 10% to 30% of the loan value available for your down payment.

Best SBA Lenders: Top 7 Options to Consider in 2023

SBA loans are backed by the Small Business Administration (SBA) and can be used to start or expand your business, purchase equipment or inventory, pay off existing business debt, or even buy commercial property. Below, you’ll find our picks for the best SBA lenders on the market.

Lendzi - Best for Excellent Customer Service

SmartBiz - Best for Upfront Pricing

SMB Compass - Best for Large Loans

Credibly - Best for Fast Funding

Funding Circle - Best for a Flawless Application

GoKapital - Best for Low Interest Rates

Fundera - Best for Comparing Loan Offers

Related Loan Picks

Main Features of The Best SBA Lenders