Live Oak Bank, based in Wilmington, has been named the most active lender of SBA 7(a) loans for the sixth consecutive year, according to the Small Business Administration. During the SBA’s fiscal year that ended on September 30, Live Oak lent $1.8 billion to small businesses through the program, which was $50 million more than the runner-up, Huntington National Bank in Ohio.
A 7(a) loan is a 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 or short- or long-term working capital. Despite being the top lender by dollar amount and having an average loan size that was larger than other banks in the group, Live Oak did not have the highest number of loans nor had the largest average loan size during this fiscal year.
The standard 7(a) loans typically have long repayment periods and low interest rates, making them increasingly popular among small businesses as interest rates hit historic heights this year. This is possible because the SBA reimburses a portion of these loans to lenders if borrowers default or cannot repay them. In exchange for this guarantee, lenders are charged a guarantee fee that is usually passed on to borrowers and is based on the size of their loan.