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BayFirst Financial announced on Sept. 29, 2025 that it would exit SBA 7(a) lending. In December 2025 it sold $94.6 million of SBA 7(a) loans to Banesco USA. It described the exit as part of a strategic review of its SBA 7(a) balances.
One lender's exit does not prove a wider pattern. Still, know your options if your lender steps back. Private credit funds and fintech platforms are options with different terms.
Fiscal Year 2025 (2,280 loans)
to Banesco USA, Dec. 2025
(17% in the 2020 survey)
Which Lenders Do the Most SBA Lending
Live Oak Bank reported 2,280 SBA 7(a) approvals worth over $2.8 billion in fiscal 2025. A small group of lenders accounts for much of SBA 7(a) volume. Check any lender's recent SBA activity before you apply.
In the Fed's 2026 report, 57% of small bank applicants were fully approved. At large banks it was 43%. Those figures cover loans, lines of credit and cash advances, not SBA loans alone.
If a community bank scales back SBA lending, its borrowers may face a longer search. They may also face a qualification gap at the next lender.
Why Lenders Step Back
Lenders step back from SBA lending for different reasons. BayFirst described a strategic review aimed at reducing the SBA 7(a) balances it held. We do not know the reasons behind any other lender's choices.
Rate moves matter to variable-rate borrowers. SBA 7(a) variable rates move with a base rate, usually Prime.
Prime was 3.25% from March 2020 to March 2022. It reached 8.50% in July 2023. It was 7.00% on Oct. 21, 2026.
Illustrative example, not a quote. Take a $500,000 balance with 10 years left at Prime plus 2.75%.
At Prime of 3.25%, the rate is 6.00%. The payment is about $5,551 a month. At Prime of 8.50%, the rate is 11.25% and the payment is about $6,958.
That is about $1,407 more a month on the same balance and term. At today's Prime of 7.00%, the rate would be 9.75% and the payment about $6,539.
(loans, lines, cash advances)
(loans, lines, cash advances)
Lender Types and Who They Often Fit
Knowing which lender type fits your profile is a practical step in the application process. The table below is general guidance, not a ranking.
| Lender Type | Examples | Often a Fit For |
|---|---|---|
| SBA specialists | Live Oak Bank | Industry-focused loans, often larger loan sizes |
| National banks | Large national and regional banks | Established businesses with strong financials and an existing banking relationship |
| Community banks and CDFIs | Local banks, credit unions, CDFIs | Smaller loans and relationship-based underwriting |
Who May Absorb Displaced Borrowers
More applicants are trying online lenders. In the Fed's 2026 report, 29% sought financing there, up from 17% in 2020. Online term lenders and revenue-based platforms often serve working capital demand.
Private credit funds may compete for larger, structured deals. Lender types also shift over time. Newtek moved its SBA 7(a) originations to Newtek Bank, National Association in 2023.
That is per Newtek's 2023 SEC filing. Check whether a lender is a bank before you compare terms.
Quick Check
Find out if your SBA lender's exit affects your options.
Meridian Private Line works with multiple lender tiers: SBA participants, private credit, and fintech platforms. One inquiry surfaces your best available match.
Check Capital Eligibility →What This Means for Borrowers in Practice
A borrower whose SBA lender steps back faces a new search. Underwriting may differ at the next lender. A borrower may qualify at one and not another.
Operators with strong credit profiles and documented financials often have more options. Operators with thinner documentation or shorter histories may need alternative credit structures. Those often cost more but may need less paperwork.
What the Rate Cycle Means for Borrowers
Prime rose from 3.25% in early 2022 to 8.50% in July 2023. It eased to 6.75% by December 2025, then rose to 7.00% on Sept. 17, 2026. The Fed raised its target range to 3.75% to 4.00% that day.
Lenders often weigh debt service coverage and existing debt alongside credit score. Ask each lender what it weighs. The factors lenders look at differ by lender type.
Sources
Figures labeled as illustrations are examples, not market data. Rates change often. Confirm current terms with a lender.
- BayFirst Financial Corp., press release, Sept. 29, 2025 (exit from SBA 7(a) lending)
- BayFirst Financial Corp., Form 8-K, Dec. 15, 2025 (sale of $94.6 million closed Dec. 12, 2025)
- Live Oak Bancshares, press release (2,280 SBA 7(a) approvals, more than $2.8 billion, fiscal 2025)
- Federal Reserve Banks, Small Business Credit Survey, 2026 Report on Employer Firms, March 3, 2026
- Federal Reserve Bank of St. Louis, FRED, Bank Prime Loan Rate (history and 7.00% as of Oct. 21, 2026)
- Federal Reserve, Open Market Operations (target range 3.75% to 4.00%)
- Newtek Business Services Corp., Form 10-K for 2023 (SBA 7(a) originations moved to Newtek Bank, National Association)
Last reviewed: October 24, 2026