SBA lending represents a significant opportunity for community banks, credit unions, and regional lenders. With over $28 billion in 7(a) loans approved in fiscal year 2024, the market continues to grow. Yet many institutions struggle to scale their SBA operations beyond a handful of loans per year.
This guide outlines practical strategies for financial institutions looking to expand their SBA lending volume while maintaining portfolio quality and compliance standards.
Why SBA Lending Deserves Your Attention
Before diving into growth strategies, consider why SBA lending merits increased focus:
- Government guarantee reduces risk: 75-85% guarantees on 7(a) loans significantly reduce credit exposure
- Premium pricing: SBA loans command higher rates than conventional commercial loans
- Secondary market liquidity: Guaranteed portions can be sold, generating immediate fee income
- Community development credit: CRA-eligible lending that strengthens local businesses
- Cross-sell opportunities: SBA borrowers often become full-relationship customers
Five Strategies to Scale Your SBA Lending
1. Pursue Preferred Lender Status
If you're not already a Preferred Lender Program (PLP) participant, making this transition should be your top priority. PLP status grants delegated authority to approve loans without prior SBA review, dramatically reducing processing time from weeks to days.
Requirements include a proven track record of SBA lending, strong portfolio performance, and demonstrated compliance capabilities. The investment in achieving PLP status typically pays for itself within the first year through increased volume and efficiency.
2. Invest in Dedicated SBA Expertise
SBA lending requires specialized knowledge. Institutions that treat it as a sideline activity rarely scale successfully. Consider these investments:
- Hire or develop dedicated SBA loan officers
- Invest in ongoing SBA training and certification
- Create a specialized SBA underwriting team
- Establish clear escalation paths for complex transactions
One experienced SBA specialist can often generate more volume than multiple generalist lenders dabbling in the program.
3. Streamline Your Loan Process
Time kills SBA deals. Borrowers often shop multiple lenders, and speed becomes a competitive advantage. Audit your current process for bottlenecks:
- How long from application to initial decision?
- What causes the most delays in underwriting?
- Where do applications stall in closing?
Implementing SBA-specific loan origination technology, standardizing document collection, and creating parallel processing workflows can cut cycle times by 30-50%.
4. Expand Your Lead Generation
Most SBA lenders rely heavily on referrals from CPAs, attorneys, and existing customers. While relationship-based leads remain valuable, sustainable growth requires diversified lead sources:
- Partner with digital lead generation platforms
- Build referral networks with business brokers and commercial real estate agents
- Create content marketing that attracts business owners researching financing
- Develop relationships with SBA resource partners (SBDCs, SCORE)
5. Leverage Technology Strategically
Modern SBA lending technology can multiply your team's capacity:
- Digital application portals: Reduce data entry and improve borrower experience
- Automated document collection: Standardize and accelerate the gathering process
- Decision support tools: Pre-screen applications before full underwriting investment
- E-closing capabilities: Eliminate scheduling delays and paper handling
Measuring Success
Track these metrics to gauge your SBA lending growth:
- Applications received per month: Leading indicator of pipeline health
- Conversion rate: Applications that become funded loans
- Average cycle time: Days from application to funding
- Approval rate: Percentage of submitted applications approved
- Secondary market premium: Gains on guaranteed portion sales
- Portfolio performance: Delinquency and default rates
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Schedule a DemoThe Path Forward
Growing your SBA lending portfolio requires intentional investment in people, processes, and technology. The institutions seeing the greatest success treat SBA as a strategic priority, not an afterthought. By pursuing preferred lender status, building specialized expertise, streamlining operations, diversifying lead sources, and leveraging technology, you can capture a larger share of this growing market.
The opportunity is substantial. With the right approach, SBA lending can become a significant revenue driver while fulfilling your institution's mission to serve local businesses.