Hello,

I had introductory calls with 4 lenders about a month ago as I started to look into SBA loans. Two were referred to me by a close friend who owns multiple businesses and two were referred by a business mentor. All 4 have given me meaningful feedback on my situation and advice for next steps.

Now I’m ready to actually get the ball rolling and upload financial docs. At the end of the day, I think getting the best interest rate regardless of who does the loan is the most important thing for me. How do I respectfully shop rates between them? Should I let them know I’m speaking to multiple lenders and it comes down to rates for me?

  • ofcourseIwantpickles@alien.topBEnglish
    1·
    10 months ago

    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!