If you’re applying for an SBA loan, one of the most important decisions you’ll make is which SBA lender to work with. Not all SBA lenders operate the same way: some have delegated authority (commonly associated with the Preferred Lender Program, or PLP) while others follow non-delegated processes where SBA review plays a larger role in the credit approval workflow.
This guide explains what it means to be an SBA lender, how lender approval works, and what PLP vs. GP typically means for loan origination speed, documentation flow, and servicing after closing.
What Is an SBA Lender?
An SBA lender is a bank, credit union, or qualified non-bank lender that participates in SBA loan programs, most commonly 7(a) (the SBA’s primary business loan program) and 504 (fixed-asset financing delivered through Certified Development Companies).
In practice, SBA lenders:
- Provide the loan funds
- Follow SBA program rules and eligibility requirements
- Rely on the SBA to provide a loan guaranty (SBA does not lend the money directly in 7(a); it guarantees a portion of the lender’s loan)
Originate: How SBA Lenders Originate Loans
When an SBA lender originates an SBA loan, it’s doing the end-to-end lending work, much like a conventional business loan, under SBA program guidelines.
Typical origination steps include:
- Intake & packaging (borrower financials, use of proceeds, ownership, eligibility)
- Underwriting (cash flow, credit, collateral where applicable, repayment ability)
- Credit decisioning (non-delegated SBA review vs. delegated authority, depending on lender/program structure)
- Closing (documentation, collateral perfection, lien positions, disbursement)
Importantly, SBA guidance notes lenders are expected to close 7(a) loans similarly to non-SBA loans and are responsible for proper closing, collateral, and lien perfection, while following the SBA’s SOP framework.
Service: How SBA Lenders Service Loans After Closing
After funding, SBA lenders service the loan for its full life cycle, typically including:
- Payment processing and escrow administration (if applicable)
- Covenant monitoring and annual reviews (common in business lending)
- Workout actions for distress or delinquency
- Liquidation and recovery steps if default occurs
SBA also publishes lender-facing tools that clarify which servicing and liquidation actions a 7(a) lender can take unilaterally versus which actions require SBA involvement.
PLP vs. GP: What’s the Difference in Real Terms?
Preferred Lender Program: PLP lenders can approve faster (delegated authority)
SBA explains that it may grant delegated authority to certain lenders so they can process, close, service, and liquidate certain 7(a) loans without prior SBA review.
In everyday borrower terms, PLP often means:
- Faster credit decisions
- Fewer “back-and-forth” rounds with SBA on standard approvals
- A lender with demonstrated SBA experience and controls
Also, under SOP updates effective in 2025, multiple legal and industry summaries note that PLP lenders are required to process most 7(a) loans using their delegated authority (with limited exceptions).
General Program: GP lenders use non-delegated processing more often
Many borrowers use “GP lender” to mean a lender that is not using delegated PLP authority for approvals, so the credit decision typically involves more SBA review in the workflow.
In practical terms, GP / non-delegated processing often means:
- Longer timelines depending on deal complexity and documentation readiness
- More structured SBA submission requirements
- Higher sensitivity to completeness and eligibility documentation
Note: “GP” is often used as shorthand in the market. The more important concept for borrowers is delegated vs. non-delegated processing and whether your lender can make a credit decision without prior SBA review for that loan type.
How Institutions Become SBA-Approved Lenders
Becoming an SBA lender isn’t automatic. SBA publishes lender participation standards in a dedicated SOP focused on participation requirements, delegated authority types, and SBA oversight of lenders.
At a high level, the pathway generally involves:
- Demonstrating commercial lending capability and controls
- Meeting SBA participation criteria and ongoing reporting expectations
- Operating within SBA supervision and review frameworks
SBA also provides lender activity data and reporting tools that reflect SBA loan approvals by lender and geography, useful when evaluating how active a lender is in 7(a) and 504.
How to Choose the Right SBA Lender for Your Business
When comparing SBA lenders, focus on operational fit, not just marketing claims:
- Delegated authority: Are they PLP (delegated) for the loan you need, or will it run non-delegated?
- Deal specialization: Do they routinely finance your use case (acquisition, working capital, owner-occupied CRE, equipment)?
- Servicing strength: Will the lender be responsive after closing (important for lines, renewals, modifications)?
- Activity level: How frequently do they originate SBA loans (more reps often means smoother execution)?
Use SBARates.com to shortlist lenders by real activity and fit
For SBArates.com, this is the “pillar” practical step: SBARates.com positions itself as a data-driven directory and intelligence platform for SBA lending, helping borrowers identify active SBA lenders and compare lender context (including industry views and rate-over-Prime style insights where available).
📌 Frequently Asked Questions About SBA Lenders
Do SBA lenders fund the loan, or does the SBA fund it?
SBA lenders fund the loan. The SBA provides a guaranty that can reduce lender risk, but the lender is the one extending capital and closing the loan. :contentReference[oaicite:12]{index=12}
What’s the difference between a PLP lender and a “general” (non-delegated) lender?
PLP lenders may have delegated authority to process and approve certain 7(a) loans without prior SBA review, which can speed decisions. Non-delegated processing typically involves more SBA review steps in the approval workflow.
Does working with a PLP lender guarantee approval?
No. PLP affects the workflow (delegated credit authority), not the outcome. The lender still underwrites your file and can decline based on credit, cash flow, eligibility, or policy fit.
Can credit unions and non-bank lenders be SBA lenders?
Yes. SBA lenders can include banks, credit unions, and qualifying non-bank lenders that meet SBA participation standards.
What should I ask an SBA lender before applying?
Ask (1) whether your loan will be processed under delegated authority, (2) their typical timelines for your loan type, (3) required documentation, (4) how they handle servicing after closing, and (5) whether they frequently finance your specific use case (acquisition, owner-occupied CRE, equipment, etc.).
How do I find an SBA lender that’s active in my industry?
You can use SBA lender activity reports to see approvals and volumes, then use a lender directory like SBARates.com to filter and shortlist lenders by activity and fit for your loan request. :contentReference[oaicite:17]{index=17}
Sources and further reading (selected)
- SBA: Delegated authority context for 7(a) loan types :contentReference[oaicite:18]{index=18}
- SBA: SOP 50 10 (origination policies and procedures for 7(a) and 504)
- SBA: SOP 50 56 1 (lender participation requirements, delegated authority types, oversight)
- SBA: Lender reports (7(a) and 504 lender activity)