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SBA Lending to Existing Businesses > 2 Years Old
Existing businesses over 2 years old is by far the biggest recipient of SBA loans in general but the smallest recipient when it comes to franchise lending. Established business loans have accounted for 42% to 49% of funded SBA loans over the last few years. In FY2024, 45% of funded SBA 7(a) loans went to established businesses while only 15% of SBA lending went to established franchise businesses over 2 years old.
FY 2024 SBA Lending Statistics
5,655 banks all-time funded an SBA 7(a) loan, 2,896 over the last decade, and 1,277 banks funded an SBA loan over the last 12 months.
Top Franchise Brands for SBA Startup Loans in 2024
Franchise startups can be perceived as more preferable and less risky to some lenders, especially those specializing in franchise lending. For non-franchise small business startup SBA loans and business loans in general, the borrower needs to have a background and some expertise in the kind of business they are wanting to startup. This requirement is met with a franchise loan since you are buying this experience and blue print.
Top Franchise Brands in SBA Lending
In FY2024 there were 5,572 franchise loan approvals and 3,680 were funded for a total of $2.7 billion and an average loan amount of $722,652. There were 1,115 different franchise brands with borrowers having an SBA 7(a) funded loan. This article highlights the top franchise brands in SBA lending.
Change of Ownership Loans in 2024
Change of ownership is a business age category tracked by the SBA. The SBA has specific and different rules for each type of loan where ownership changes hands. During FY 2024 there were 627 banks funding 4,151 change of ownership loans for $4.8 billion with an average loan amount of $1,158,934.
SBA Lending to New Businesses Under 2 Years Old
Securing a loan as a new business can be particularly challenging. Traditional lenders often hesitate to finance young companies with limited operating history and unproven revenue streams. These lenders prioritize established businesses with a track record of success and a demonstrable ability to repay debt.
Are Local Banks Good for SBA loans?
When a small business owner thinks they want to apply with their current or a local bank it is primarily based on prioritizing familiarity. “I’m familiar with this specific bank because I drive by it on the way to the office”. Or, “the local branch I bank at is familiar with me so I have the best chance of my loan getting approved with them”.
1% of SBA Banks Fund Half the Loans
SBA lending is a lending specialty some lenders have made a special focus and have dedicated the resources and people to maximize how many SBA loans they can close annually.
With SBA’s extensive rules and requirements, success in this space demands a well-rounded combination of expertise, credit risk acumen, and a robust business development network.
To understand what and where the top SBA lenders are focused on, we analyzed the collective performance of the most recent top 1% SBA lenders. We looked at their combined top industries, franchise loan industries, states and cities, the emphasis on out of state lending, average loan amounts, and our SBA lending forecast model for combined lenders in the one percent.
Startup Business Loans in 2024
Startup business loans is a popular loan purpose in SBA lending. While it varies by year, startup loans account for just under 20% of all SBA 7(a) loans and nearly 40% of the franchise funded loans over the last year.
SBA Franchise Lending in 2024
457 banks funded 3,680 franchise loans for $2.7 billion to franchise borrowers from 1,115 different brands in 222 industries. The average loan amount funded was $722,652. SBA franchisee loans were funded in all 50 states to borrowers from 1,633 cities. 81% of SBA franchisee loans were funded for a project state which is different than the bank’s state. The average bank spread over the prime rate was 2.37%. Franchise business loans accounted for 13% of all funded SBA 7(a) dollars.