Live Oak Bank, a Wilmington-based financial institution, has been named the most active lender of SBA 7(a) loans for the sixth consecutive year, according to the U.S. Small Business Administration. During this fiscal year that ended on September 30th, Live Oak lent $1.8 billion to small businesses through the SBA 7(a) loan program, surpassing Huntington National Bank in Ohio as the top lender by dollar amount.
A 7(a) loan is the primary business loan program offered by the SBA and can be used by small businesses for various purposes such as refinancing, acquiring or improving real estate buildings and short or long-term working capital. Despite being the top lender by dollar amount and having an average loan size of over $15 million, Live Oak did not have the most loans nor the largest average loan size of the group.
Standard 7(a) loans typically come with long repayment periods and low interest rates, making them highly sought after by small businesses as interest rates hit historic highs this year. This is possible because the SBA reimburses a portion of the loan to the lender in case of default or inability to repay, making it a less risky investment for banks. In exchange, borrowers are charged a guarantee fee based on loan size which is usually passed on to borrowers.