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Hi, SBA lender here. I appreciate when my clients let me know that they have other offers from banks. It gives me an opportunity to address the pricing and see if I can match it. I’m not always competitive when it comes to the rate. A few things to consider in addition to rate. I would say looking at the rate is good, but if getting the lower rate shouldn’t be the determining factor.

Things to Consider

1. Are you dealing with a commercial banker or an actual SBA Development Officer? It makes a difference during the closing process.
2. Every lender interprets the SBA rules differently. Are they any covenants that each lender is asking for such as a lien on your home, more cash down, annual reporting requirements or required debt service ratios?
3. How long does it take for the loan to be approved and when do you get your commitment letter? A typical timeline is 2 weeks for a decision, if the bank has a complete package.

You can message me. Depending on the loan amount and the use of proceeds, this will help me give you the best advice.

Bankers compete for the same deal all the time.

I just went through getting a line of credit from my biz. I spoke with Chase, a local credit union I’ve banked with for years, and local midsized business focused bank.

I got terms including fees and rates from Chase, then talked to the 2 local options. I explained I wanted to work with them, what I liked about Chase’s offer, and where I wanted it to be better.

If you’re clear and fair, lenders will be happy to talk terms to try to earn the business. In the end I got a rate 4.5% lower than Chase’s lowest offer, and fees waived for 1 year.

On an SBA 7A loan all lenders are subject to the same rules, but most are variable rate lenders as they sell the 75% guaranteed potion and typically must achieve Prime + 2 - 3.00%. Otherwise, they can’t get the return to make their business model work. Please also keep in mind that these lenders all pay a point to referral sources (a big part of the Prime+ business model). And yes, that means on a max $5M deal they pay out $50k to the referral source.

A fixed rate lender puts the entire loan on the balance sheet, and can offer a much lower spread over Prime or do a 5 - 25 yr fixed rate depending on the deal. Many variable rate lenders will say that all/most SBA loans are floating rate but that isn’t true. However, the fixed rate lenders are typically more conservative and may limit the unsecured amount per loan/require more cash in, etc. I think right now a 5-yr lock then Prime + 1.00% is an attractive structure as you get the best of both worlds.

You are smart to shop it, and it’s perfectly ethical to do so—particularly if you are transparent about it. Good luck!

In my experience, all the bankers not only know each other but probably have each worked at each other’s banks. With that in mind, I would be candid about not just the offers but the other bankers you’re working with. They are a little bit competitive but as it’s a tightknit community, they a) like knowing what their competitors are doing, to use that leverage with their management and b) are likely to be candid in return. Small business banking isn’t just a long game, because they jobhop they are more likely to make sure you get the best fit (because they want you to come to them, personally, the next time you need something, and they might not be at that bank anymore).

At least, that’s been my experience

Remember in Goodwill Hunting when Ben Affleck is filling in for Will’s NASA interview? “Retaiiiiiner. RETAINER”.

Just yell that at them with no context. Whoever still gives you $ will be the easiest going to deal with.