The Reality of the Market for SBA 7(a) Lending: “Plenty of Room for Growth, But a Need for Targeted Marketing”

As experienced SBA Lenders know, the 28 million Small Businesses nationwide is not the actual size of the market for 7(a) Loans. It is much smaller because only 10% of Small Businesses can qualify for an SBA loan on both an eligibility and credit worthiness basis. Accounting for these this factor and several others, a market size of roughly 1.5 million for SBA 7(a) Lending seems more realistic - smaller, but still large enough to support the future growth of 7(a) Lending.

In 2018 more than 60,000 small business were financed through SBA Programs. While it was a highly successful year, from another perspective it represents only 3% of the potential market. There is plenty of room for growth!

In our view, many Community and Regional Banks have the greatest potential to grow their SBA Programs by identifying and developing the growth potential of their local markets. To realize this growth, we believe Targeted Marketing Programs are needed.

Our Program, SBA Market Insights, provides Community and Regional Banks the key element of all successful targeted marketing programs: the capability to identify SBA Loan Prospects in their markets with a high probability of becoming a funded loan.

These are High Value SBA Prospects because they have these characteristics:

  • They meet SBA Eligibility and Creditworthiness Qualifications

  • They have a low probability of defaulting on loan payments

  • They operate in one of the top 20 industries accounting for 76% of all 7(a) Loans

  • There is information on them readily available to evaluate their business and credit profile

  • There is current, detailed contact information on them to focus a target a marketing program

  • They have a need for financing within 90 days

Community and Regional Banks do not need to lend out of market to grow. They need better marketing tools to identify SBA Lending Prospects that will enable them to grow locally and lend sensibly.