SBA 7(a) Lending Hits Five-Year High as Growth Shifts Toward Larger Loans and Business Acquisitions

SMBQuotes analysis of SBA loan-level data finds $10.6 billion in Q3 7(a) approvals, with loans over $1 million driving all net growth as smaller loans contract.

NEW YORK, NY, UNITED STATES, November 2, 2026 /EINPresswire.com/ -- The U.S. Small Business Administration approved 15,306 loans totaling $10.58 billion through its flagship 7(a) program in calendar Q3 2026, the largest quarterly dollar volume since the pandemic-era lending surge of 2021, according to an analysis of the SBA's loan-level records released today by SMBQuotes.com.

The headline masks a shift in the mix. Loans over $1 million rose 12 percent year over year and now account for 70 percent of all 7(a) dollars, up from 65 percent, while approvals under $150,000 fell 23 percent. The loan count was 9 percent below a year earlier, or about 4 percent higher once later-cancelled loans are removed from the prior-year figure. The median loan rose from $207,700 to $258,000 and the average reached $691,510, the highest since 2021.

September alone accounted for $5.2 billion across 6,289 loans, nearly half the quarter's total, as lenders cleared pipelines into the SBA's September 30 fiscal year-end.

"As a whole, the SBA program is writing bigger checks to fewer businesses. If you need $2 million to buy a business, this was a very good quarter to be in the market. If you need $75,000 to get through the winter, the data would suggest that lenders are tighter with those options than they were a year ago," said Seth Broman, founder of SMBQuotes.

Business acquisitions account for nearly one-third of SBA lending

Loans the SBA records as financing a change of ownership reached 2,402 loans and $3.24 billion, 31 percent of all 7(a) dollars, against 25 percent a year earlier and 21 percent two years earlier. Acquisition dollars rose 32 percent, at an average loan of $1.35 million, and 82 acquisition loans were for $5 million or more, up from 43.

"Nearly a third of the quarter's dollars went to someone buying a business from someone ready to sell. That is the ownership transition we've been hearing about for years, now visible in the loan book, not just the forecasts," Broman said.

New SBA underwriting rules took effect October 1, including a quality-of-earnings report for acquisitions over $3 million, so some September activity may have been pulled forward. The fourth quarter will show how much of the demand is durable.

Rates fell for a fifth straight quarter, then Prime moved higher

The average initial rate on a Q3 7(a) loan was 9.29 percent, down from 9.45 percent the prior quarter and 10.16 percent a year earlier. About 87 percent of 7(a) loans carry variable rates tied to Prime, which rose from 6.75 to 7.00 percent on September 17, the first increase since July 2023, so the fourth quarter is the first in which those borrowers pay more.

Charge-offs are rising on every measure

SMBQuotes' companion Lender Default-Rate Index finds the SBA charged off 3,890 loans worth $471 million in the four quarters to September 30, against 2,380 loans worth $349 million in the prior four quarters, increases of 63 and 35 percent. Cumulative charge-offs on fiscal 2020 to 2022 loans reached 4.04 percent, from 3.60 percent three months earlier, and the fiscal 2023 vintage is the worst in the file at every age measured. Loans of $50,000 or less have charged off at 8.3 percent, loans over $1 million at 0.7 percent. The small-loan bands with the highest losses are the bands where approvals are falling fastest, a pattern consistent with lenders tightening where their portfolios are hurting, though the file does not record why applications are declined.

Lenders, restaurants and 504

Newtek Bank approved the most 7(a) loans, 1,193 at an average 11.19 percent, and Live Oak Bank led in dollars at $925 million. Restaurants, the most-financed industry, borrowed $1.0 billion at an average 9.22 percent. The SBA 504 program moved the other way, with 1,616 projects and $1.83 billion in debentures, down 17 and 19 percent from a year earlier.

About the reports

All four reports are built from the SBA's 7(a) and 504 FOIA datasets at data.sba.gov, data as of September 30, 2026. Full tables, lender rankings, methodology and downloadable charts are at smbquotes.com/reports/. SMBQuotes publishes original research on small business financing built from primary government data.

Media contact: Seth Broman, Founder, SMBQuotes, sbroman@smbquotes.com

Seth Broman
SMBQuotes
sbroman@smbquotes.com
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