SBA Loans for MSPs and How to Choose the Right Lending Partner
▶️ Watch: Choosing the Right SBA Loan Partner for MSPs
Prefer to read? The key ideas from the video are expanded below.
One of the biggest mistakes I see with SBA loans is assuming all banks handle them the same way. They don’t.
Some small or mid-sized banks can technically do SBA loans, but they only do a handful each year. And on the other end, I’ve seen big national online SBA lenders fumble badly too — my own experience included.
Where I’ve seen the best results is with banks that do a lot of SBA lending and actually specialize in it. They have people who understand the program, know the process, and are less likely to be figuring it out as they go.
Look for a Bank That Actually Specializes in SBA Lending
The first question I would ask a banker is simple: How many SBA loans did your bank do last year?
Be specific. If the answer is, “We did three,” that’s probably not who you want guiding you through a process this complicated.
You’re not just looking for someone who can fill out paperwork. You’re looking for a partner who understands the process well enough to explain your options, anticipate what is coming next, and keep unnecessary mistakes or delays from piling up.
SBA does allow certain lenders delegated authority to process some 7(a) loans without prior SBA review, but even that does not guarantee a smooth borrower experience. Volume and experience still matter because the lender is responsible for a lot of the work that happens before the loan ever closes.
Pay Attention to How the Bank Thinks About SBA Lending
It’s also fascinating how differently banks view SBA lending.
I know one banker at a local regional bank that does a ton of SBA loans. His take is that the federal government has given banks an opportunity and responsibility to help Americans start and grow businesses.
For an MSP owner, that can mean financing an acquisition, hiring, tools, or another investment without putting so much pressure on cash flow that the business cannot move forward.
Other banks approach SBA lending more like a conventional loan with a government guaranty attached. The SBA guaranty reduces some of the lender’s risk, but it does not remove the lender’s responsibility to underwrite the loan or the borrower’s responsibility to repay it.
That’s where the old joke comes in: bankers are happy to give you a loan once you can prove you don’t need it.
The difference in philosophy matters. A bank that sees SBA lending as a tool for helping viable businesses grow may approach the process differently from a bank that treats it as just another product line.
Talk to More Than One Bank
Here’s another piece of advice I strongly recommend: don’t just talk to one bank. Talk to at least two, maybe three.
Go through the preliminary steps with more than one lender. Be transparent. Tell them you’re feeling this out and talking with a couple of different banks.
They may not love that, but in my experience it usually makes them more responsive because they know they are not the only option. You’re actually deciding who you want to work with.
As the process develops, you may find that the broad economics start looking fairly similar while the experience with each lender feels very different. One bank may communicate better. One may understand your deal faster. One may simply be easier to work with.
That matters because you are going to spend a lot of time with this lender before the loan closes.
Keep More Than One Option Alive
And don’t shut down the second option too soon.
If the bank you prefer falls through, you’ll be glad you still have another option alive. Keeping a second lender moving creates more work upfront, but it can protect you from having to start over from scratch if something changes late in the process.
When it comes to SBA loans, you are not just choosing an interest rate and a term. You are choosing the bank that is going to guide you through a complicated process.
Look for a lender that actually does a meaningful amount of SBA work. Ask how many loans they did last year. Talk to more than one bank. And pay attention to which lender communicates well, understands the deal, and seems capable of getting it across the finish line.
This article is for educational purposes only and is not tax or legal advice. Every business is different, and you should talk with your own professional about what makes sense for your situation.
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