The SBA lending landscape continues to evolve with changing economic conditions, policy updates, and borrower needs. Understanding market trends helps lenders identify opportunities and allocate resources effectively.
This analysis examines the current state of SBA lending and highlights opportunities for growth in 2025.
SBA Lending by the Numbers
The 7(a) program remains the dominant SBA product, accounting for the majority of guaranteed loan volume. The 504 program continues steady growth, particularly for commercial real estate and major equipment purchases.
Key Market Trends
Business Acquisitions Driving Volume
The baby boomer retirement wave continues to fuel business acquisition financing. SBA 7(a) loans remain the primary financing vehicle for acquisitions under $5 million, with change-of-ownership transactions representing an increasing share of loan volume.
Trend: Acquisition financing grew 15% year-over-year
Commercial Real Estate Demand Shifting
Owner-occupied commercial real estate financing patterns are changing. Healthcare, professional services, and light industrial properties show strength, while traditional office and retail face headwinds. SBA 504 loans for owner-occupied properties remain attractive given lower down payment requirements.
Trend: Healthcare and services CRE outpacing overall market
Interest Rate Sensitivity
SBA loan rates, tied to Prime, have stabilized after the rate increases of 2023-2024. Borrowers remain rate-sensitive but are increasingly prioritizing access to capital over rate optimization. The spread to conventional alternatives remains favorable for SBA products.
Trend: Rate stability encouraging long-deferred borrowing decisions
Technology Sector Participation
Traditional tech startups remain largely outside SBA lending (VC-backed, asset-light), but technology-enabled service businesses increasingly qualify. IT services, managed service providers, and software implementation firms represent growing SBA borrower segments.
Trend: Tech-services SBA lending up 22% year-over-year
Opportunities for Lenders
1. Underserved Geographies
SBA lending concentration in major metros leaves opportunity in secondary and tertiary markets. Community banks and credit unions with local presence can capture share where national lenders have limited reach.
2. Specialty Industry Focus
Developing expertise in specific industries creates competitive advantage. Healthcare (dental, veterinary, medical practices), franchising, and essential services offer consistent deal flow for lenders who understand the sectors.
3. Express Loan Efficiency
SBA Express loans up to $500,000 offer faster processing with the same guarantee structure. Lenders with streamlined Express processes capture borrowers who value speed over maximum loan amount.
4. Refinancing Opportunities
Businesses that took on higher-rate conventional debt or alternative financing during the rate spike are candidates for SBA refinancing as conditions stabilize. Proactive outreach to these borrowers presents near-term opportunity.
Competitive Landscape
The SBA lender landscape includes:
- Large banks: Volume leaders with brand recognition but standardized approaches
- Community banks: Relationship focus with local market knowledge
- Credit unions: Member-focused with competitive rates
- CDFIs: Mission-driven with underserved market expertise
- Non-bank SBA lenders: Technology-forward with streamlined processes
Success requires differentiation—whether through speed, specialization, relationship depth, or geographic focus. Competing on all dimensions isn't practical; choosing your battles strategically is essential.
Regulatory Outlook
The SBA continues refining program rules and procedures. Key areas to watch:
- Size standard updates: Periodic revisions to industry size thresholds
- Affiliation rules: Ongoing clarification of ownership and control tests
- Technology requirements: Increasing electronic submission and reporting mandates
- Lender oversight: Enhanced monitoring of portfolio performance
Position Your Institution for Growth
Our platform helps lenders capture market opportunities efficiently.
Schedule a ConsultationStrategic Planning for 2025
As you plan your SBA lending strategy, consider:
- Assess your current position: Where do you compete effectively today? Where do you lose deals?
- Identify target segments: Which industries, geographies, or loan types offer the best fit for your capabilities?
- Evaluate technology gaps: What investments would meaningfully improve efficiency or borrower experience?
- Build talent pipeline: SBA expertise takes time to develop—start building now
- Set realistic goals: Sustainable growth beats boom-and-bust cycles
The SBA lending market offers significant opportunity for institutions willing to invest in capabilities and commit to the long game. Understanding market dynamics is the first step toward capturing your share.