Buyer, builder, borrower: whatever the answer, SBA loans are increasing.
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Loans supported by the Small Business Administration are off to a near-record start in 2025.
The SBA approved $8.8 billion in 7(a) loans during the first quarter of the federal fiscal year (which began October 1), making it the second-fastest start since 1991, when the agency began tracking the data. This figure is up 38% from the first quarter of 2024. The last time the program got off to such a strong start was in 2011, following the Small Business Jobs Act of 2010 , which raised the cap on the amount an individual can finance from $2 million to $5 million. the business owner could borrow.
The 7(a) program has long been a favorite among professional buyers. Established in 1953, it allows borrowers to obtain loans of up to $5 million, with favorable terms including low down payments and extended repayment schedules. Loans are particularly popular for financing the acquisition of existing businesses, thanks to their government guarantees which reduce risk for lenders.
Mark Edler, the founder of Builders.CPAan accounting firm that caters to small business buyers, says there are several reasons for the increase in SBA loan volumes.
“There’s a constant flow of people who are really looking to buy a business because they’re looking to change their lives and their lifestyle,” he says. And unlike big business, where M&A activity rises and falls with interest rates, aspiring entrepreneurs who buy businesses don’t let high rates get in the way of their plans.
Edler also points to recent SBA rule changes that have made it easier to do deals. In May 2023, the SBA began allowing borrowers to take out multiple 7(a) loans, offering nearly unlimited financing as long as the acquisitions concern different sectors. A December 2024 update went further, allowing buyers to use agency-backed loans while still offering the seller’s equity in the new business— an option previously prohibited.
Stephen Speer, founder of Ecommerce Loansan online business acquisition advisor, sees more tailwinds driving the market. Among them, baby boomers provide a steady supply of established, profitable small businesses for sale, as they look to step down and retire. Many of these decades-old businesses have rightly earned the trust of buyers by proving their resilience during the COVID-19 outbreak.
Adding it all up, Speer says “the record pace of SBA business acquisitions will likely continue through 2025.”
But Jerry Freedman, director of Business financing with complete freedombelieves that it is not acquisitions that are fueling the boom. His analysis of SBA data and interviews with lenders leads him to believe that much of the volume is for small loans and SBA Express lines of credit. The SBA’s Small Loan and Express Line of Credit programs are subsets of the 7(a) Loan Program, designed to provide faster, more accessible financing. Small Loans provide financing up to $500,000, while Expresslines provide quick access to revolving credit, both guaranteed by the SBA to reduce lender risk.
“While I feel the excitement about corporate acquisitions and the ‘Silver Tsunami’ – and I’m also excited and love helping researchers fund their dream acquisitions – I don’t believe the volume is driven by acquisitions,” says Freedman.
Ray Drew, chief executive officer of Truliant Federal Credit Union, based in Winston-Salem, North Carolina, and host of The Art of SBA Loans Podcastnotes that even though loan volume is increasing, the average loan size continues to decline. He says that’s partly because banks and credit unions are stepping in to make smaller loans to businesses. Previously, he says, this space was occupied by fintechs that charged “an arm and a leg,” which could send borrowers into a “death spiral.”
Miami-based Newtek Bank led lenders in the first quarter, approving $738 million in loans. It was also the largest lender for fiscal year 2024, with $2.1 billion approved. Live Oak Banking Company, based in Wilmington, North Carolina, followed with $564 million in approvals, while Huntington National Bank in Columbus, Ohio, came in third with $423 million. Together, the top three accounted for 20% of total loan volume.
“Until a few years ago, most SBA lenders stayed away from small loans,” says Drew. “But through the use of technology, lenders have enjoyed efficiencies that have made the small loan game more economical.”