Most Business Borrowers Initially Contact Low Probability Lenders
Most Business Borrowers Initially Contact Low Probability Lenders
Small business owners often start their SBA loan journey by reaching out to the lender least likely to approve their application. It’s a systemic issue nationwide: selecting the right SBA lender is a challenge many entrepreneurs don’t even realize they’re facing.
Why would a restaurant owner apply for an SBA loan with a bank that’s never funded a restaurant before? Why do business owners seek million-dollar loans from lenders whose largest SBA loan topped out at $350,000 three years ago? The answer is simple: they just don’t know. And until recently, finding this kind of insight about SBA lenders was nearly impossible.
Many small business owners assume all SBA lenders are roughly the same. Each year, thousands apply for loans by picking a lender from a top-ranked list they stumbled across online or defaulting to their current bank, hoping it’s a good fit. It’s like throwing darts blindfolded—hitting the board on the first try is tough more-or-less thee bullseye, especially when you don’t know the target.
If an SBA lender has no track record of approving loans in your industry or for your requested amount, the odds of your application being their first success are slim. The lenders with the highest probability of approving your loan are those currently top-ranked for your specific industry, franchise (if applicable), and loan amount range—and who actively lend in your state. Analytics and experience show these factors—industry alignment, loan size, and geographic focus—are the most predictive.
SBA Lenders Aren’t One-Size-Fits-All
Most SBA lenders specialize in a dozen or two industries—sometimes less—where they approve the bulk of their loans. These are the sectors their credit teams and loan committees understand, have experience with, and feel comfortable funding. We’ve lost count of the times a lender dismissed a loan out of hand simply because the business’s industry didn’t align with their focus. There’s nothing inherently wrong with the industry—it’s just not the right match for that lender’s preferences or current priorities.
Of course, creditworthiness matters. Borrowers must meet the lender’s standards for credit score, history, and cash flow. But here’s the catch: if your industry or loan amount doesn’t fit the lender’s sweet spot, you might not even get a chance to prove your qualifications. Worse yet, a sales team might push your application through to underwriting, only for the credit team or committee to reject it because they’re uneasy with the industry or loan size. (Pro tip: It’s the credit team, not the sales team, that holds the real decision-making power. If you find an SBA lender where salespeople call the shots, let us know—we’ve got a flood of business to send their way!)
Lender Focus Can Shift
Lender priorities aren’t static. An SBA lender that rarely funded dentists in the past might now be targeting that industry, perhaps after hiring a Business Development Officer to build a new lending vertical. These transitional cases can go either way—some lenders may scrutinize early loans in a new sector more closely, while others might be eager to establish a foothold and take a chance. Either way, knowing a lender’s history and current focus gives you an edge.
Stop Guessing, Start Knowing
LoanBox bridges this knowledge gap, helping small business owners make informed choices about SBA lenders. With LoanBox, you can see the top-ranked SBA lenders for your industry or franchise brand, based on real data. Our reports also break down which industries, loan amounts, and locations each lender prioritizes, so you’re not left guessing.
The takeaway? Don’t waste time on low-probability lenders. Match your business to an SBA lender with a proven track record in your industry and loan range. It’s not about finding any lender—it’s about finding the right one.
Think Inside the LoanBox
For smart business lending think inside the LoanBox. Just log in, answer questionnaires, complete your loan package, and the platform will match you to the exact right lenders you match 100% of dozens of criteria points. Select which lenders you want to access your loan package and offer a loan proposal. Receive loan proposals from interested lenders, select the winning lender, and always know what’s going on from application to funding and what’s needed next in the loan process. Or have a friendly LoanBox Advisor just handle everything for you.