Financial well-being April 1, 2025 By
If you’ve been looking into SBA loans as a way to grow your business, you may have come across the term SBA Preferred Lender. Here’s what prospective borrowers should know about SBA Programs and Preferred Lender designation:
The U.S. Small Business Administration is an independent agency of the federal government that assists businesses and entrepreneurs. The SBA partners with local financial institutions to provide affordable loans for a range of business purposes, including startup costs, working capital, real estate and equipment purchases, and debt refinancing. The SBA guarantees a portion of each loan to mitigate lender risk and enable more emerging-business owners – including those in underserved communities – to access the capital they need.
Reasons to Consider an SBA Loan
SBA loans offer small businesses key advantages, including:
- Lower down payments / equity injection
- Lower injection helps preserve needed working capital especially in start up businesses
- Longer finance terms allows for a lower monthly payment
- Fully amortizing loans with no balloon payments
- Competitive rates
- Preferred Lender Program (PLP) Lender allows for faster approvals from the SBA
If any of these benefits meet your business needs, then an SBA loan might be the right choice for you.
What Are My Options?
There are several types of SBA loans you may want to consider, including:
7(a) loans, which are the most popular SBA loans and can be used for a wide variety of purposes.
504 loans, which can be used for long-term fixed assets like real estate and major equipment.
CapLines, which is a revolving line of credit with a borrowing base of accounts receivable and/or inventory.
Express loans, which are $500,000 or less and can be structured as revolving lines of credit with no borrowing base.
What Is an SBA Preferred Lender?
An SBA Preferred Lender is a financial institution that is authorized to process, close, and service SBA loan applications. To earn this designation (which is sometimes referred to as the Preferred Lender Program, or PLP), financial institutions must meet strict standards set by the SBA and demonstrate a track record of successfully processing and servicing small-business loans. Preferred Lenders must be approved by SBA headquarters. This credential must be renewed every two years.
The Preferred Lender Advantage
Working with an SBA Preferred Lender can offer emerging businesses several key benefits:
Faster turnaround
It’s trite but true – time is money. With a streamlined application and underwriting process that’s fully in-house, with minimal SBA review required, you can get the funds you need more quickly. That means you can seize opportunities that just won’t wait and get a head start on your big plans.
More flexibility
Since they’re calling the shots a Preferred Lender makes the loan approval decision with underwriting completed entirely in-house. They can offer a personalized experience along with favorable rates and terms that allow you to optimize your borrowing power and cash flow.
Useful insights
You’ll have a knowledgeable financial partner who understands the needs of small businesses and can guide you through the whole loan process and beyond. Community financial institutions with Preferred Lender status have a thorough understanding of procedures as well as your local business environment.
Greater peace of mind
Because SBA Preferred Lenders have to work hard to earn and maintain their designation, you can bank and borrow with confidence. Their lending portfolios are subject to periodic audits by the SBA, which provides an extra layer of assurance that the institution is operating with integrity.
Getting Started
You can work directly with your chosen loan officer to learn more and get the ball rolling. They’ll let you know what documents you need to gather and how long you can expect the process to take. In the meantime, you can gear up for success by reviewing how to get ready for your business loan meeting. You can learn more about our SBA lending options here.
