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A Small Business Association (SBA) loan is designed to make it easier for businesses to get the capital they need to grow while reducing the risk for lenders. The most common type of SBA loan—the 7(a) loan—can be used for real estate, working capital, debt refinancing, and purchases.
We’ve collected data on 10 top lenders to compare their loan amounts, loans originated, average rates, and other key factors to narrow down the list to the five best SBA loans for startups.
Huntington Bank
Pros & Cons
Pros
Wide range of loan amounts
Highest number of loan approvals
Offers multiple types of SBA loans
Cons
No online application
Limited loan information on the website
Branches in just 10 states
Why We Chose It
We like Huntington Bank for its wide range of loan amounts available. You can borrow anywhere from $1,000 to $5 million with a Huntington Bank SBA loan, though the average amount is roughly $175,000. So no matter how much money your startup company needs, Huntington Bank could be a good option.
Huntington Bank also approves the largest number of SBA loans of any lender on our list. In fact. In 2022, the company was the largest originator of SBA loans by the number of loans. It approved 5,675 loans in 2022, which is thousands more than the next largest SBA lender.
Live Oak Bank
Pros & Cons
Pros
Low average interest rate
Part of the SBA Preferred Lender Program
Available in all 50 states
Cons
No online application
No physical branches
Not available for all industries
Why We Chose It
Live Oak Bank is a great option if you want the most affordable loan. The company has the best average interest rate of any lender on our list, based on loan originations in 2022. Live Oak Bank is also the largest SBA loan lender in terms of the dollar amount approved. It approved nearly $1.7 billion in SBA loans in 2022, with an average loan amount of more than $1.46 million.
Another thing to like about Live Oak Bank is that it’s a part of the SBA’s Preferred Lender Program, which allows it to approve loans more quickly—often three to four weeks faster than other lenders.
Wells Fargo
Pros & Cons
Pros
Best national bank on our list
Thousands of physical branches
Many small business services and financing
Cons
High average interest rate
Limited information on the website
Must schedule an appointment to apply
Why We Chose It
Wells Fargo is a great option for borrowers who prefer to work with a national bank. First, because Wells Fargo is so large and widely available, it’s easy for business owners to access a local branch and speak with a representative in person.
As a large national bank, Wells Fargo is also able to offer a large number of business products and services. If you want to do all of your business banking and borrowing in one place, Wells Fargo would allow you to do that.
Funding Circle
Pros & Cons
Pros
Online application available
Transparent website
Fast approval and funding time
Cons
Shorter loan terms
No small loans available
Higher interest rate than some competitors
Why We Chose It
Funding Circle stands out among its competitors for its online application process. Most lenders require you to get in touch with a loan expert to start the process, but Funding Circle allows you to get started online. The convenient process continues once you apply, as Funding Circle has a fast approval and funding timeline—you’ll typically have your loan approved in about three weeks.
The online application is just one thing to like about the company’s website. It’s also more transparent than most lenders about the loan process and requirements and has additional resources and calculators for business owners on the fence or seeking more details about a loan.
TD Bank
Pros & Cons
Pros
Pre-qualification available
Transparent website
Part of the SBA Preferred Lender Program
Cons
High average interest rate
Must schedule an appointment to apply
Only available in 15 states and Washington D.C.
Why We Chose It
TD Bank’s website is a great starting point for anyone looking to apply for an SBA loan. The lender is more transparent than many about its loan requirements and features. It also offers other small business resources. Finally, TD Bank allows you to pre-qualify for a loan.
Another benefit of an SBA loan with TD Bank is that it's part of the SBA’s Preferred Lender Program, meaning your approval process can be streamlined so you can get your money more quickly than you might with other lenders.
Startup companies have plenty of options when searching for an SBA loan. Each of the lenders on our list has something to offer that makes it stand out from the rest. Huntington Bank and Live Oak Bank are the two largest SBA lenders in terms of the number of loans and the total dollar amount, respectively. Live Oak Bank also has the added benefit of having the best average interest rate.
If the borrowing process is most important to you, you might prefer to work with a company like Funding Circle, which has an online application process, or a lender like Live Oak Bank or TD Bank, which are a part of the SBA Preferred Lender Program and, therefore, offer a more streamlined process.
There are a few things you should keep in mind as you’re getting ready to apply for an SBA loan:
While many lenders don’t disclose their credit score and revenue requirements on their websites, you can set up a meeting with a loan advisor who will review your finances and tell you if you’re likely to qualify.
Here’s how you can get an SBA loan to grow your startup company:
You don’t necessarily have to apply with only one lender. As with other types of loans, SBA lenders can explore different options to find the best rate and terms.
An SBA loan is just one financing option available to startup companies, but it’s far from the only one. Here are a few other ways startups can raise capital to grow their businesses:
Business loans—including SBA loans, business lines of credit, and business credit cards—often rely on your personal creditworthiness to qualify. If your credit isn’t where you’d like it to be, work on improving it to make it easier for your business to get the capital it needs.
The best SBA loan for any startup depends on that company’s specific needs. Some lenders may offer better interest rates, while others have a wider range of loan amounts or an easier application process. Once a borrower identifies their loan priorities, they can decide on the best option.
SBA loans can be worth it for many businesses. They may be available to businesses that wouldn’t qualify for traditional business loans since the SBA helps to reduce the risk for lenders. They also come with advantages like competitive rates and fees, counseling and support for your business, lower (or no) down payment and collateral requirements, and more.
An SBA loan may not be worthwhile for a business that qualifies for a better interest rate elsewhere or one that doesn’t want to wait for the longer application and funding process that SBA loans often have.
It may be difficult for a startup company to get a loan because of its revenue or time in business. Lenders often require a certain amount of revenue to ensure the borrower will be able to repay their loan. Additionally, a lender may require that a business be in operation for a certain amount of time before qualifying for a loan. For very new startups or those without much revenue, qualifying for a loan may be challenging.
The maximum SBA loan amount is $5 million. However, that doesn’t mean everyone will qualify for that amount, particularly startups. The amount you’ll be able to borrow will depend on your lender, your business revenue, your creditworthiness, and other factors.
Investopedia is dedicated to providing its readers with unbiased, comprehensive reviews. To rate SBA loans for startups, we collected data on 10 of the most active SBA lenders, including loan amounts, number of loans originated, interest rate details, and other factors.
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