The SBA 7(a) loan program is a popular financing option for small businesses in the United States. It provides loans backed by the U.S. Small Business Administration (SBA) to help small businesses obtain capital for various purposes, including working capital, equipment purchases, and real estate.
An SBA Lender Service Provider (LSP) is a third-party organization that supports lenders in navigating the SBA 7(a) loan programs. LSPs assist with loan packaging, underwriting, and processing, ensuring compliance with SBA regulations throughout the lending process. LSPs also offer training and consultation to enhance lenders' understanding of SBA requirements, along with ongoing loan servicing and liquidation support. By partnering with an LSP, lenders can improve operational efficiency and better serve their clients in the SBA lending space.
SBA (7) lending can be an excellent fit for many institutions, especially those looking to expand their portfolio with low-risk, government-backed loans. If your institution serves small businesses, participating in the 7(a) program can enhance your offerings and attract a broader client base. SBA loans are particularly beneficial for institutions that want to provide financing solutions to businesses that may not qualify for traditional loans.
Additionally, the SBA guaranty reduces the risk for lenders, making it easier to approve loans while still maintaining sound lending practices. SBA 7(a) lending can be a rewarding opportunity that fosters community growth and strengthens your institution’s impact.
An SBA guaranty on a 7(a) loan is a commitment from the U.S. Small Business Administration to cover a portion of the loan amount if the borrower defaults. This guaranty typically covers up to 85% of loans up to $150,000 and 75% for larger loans, significantly reducing the risk for lenders.
Selling the guaranteed portion of an SBA 7(a) loan on the secondary market enables lenders to enhance liquidity and effectively manage risk. When an SBA 7(a) loan is issued, a portion—typically up to 75% or 85%—is guaranteed by the SBA, making it an appealing investment for buyers. At SBA WORX, we streamline these sales, allowing originating lenders to reinvest the proceeds into new loans or improve their liquidity. By participating in this process, lenders can efficiently manage their portfolios while continuing to support small businesses.
With over 50 years of combined experience, our team offers expert consultation, tailored loan service solutions, and continuous support to help your institution excel in SBA 7(a) lending. At SBA WORX, we strive to be your trusted partner, allowing you to concentrate on the other core activities that drive your lending institution’s success.
Contact us today to schedule a consultation. We’ll explore your institution's growth potential and the exciting opportunities that come with offering SBA 7(a) loans.
