Small businesses are crucial to any community. In Minnesota, they make up 99.5% of all businesses in the state. Many business owners turn to Small Business Administration (SBA) loans to help support their endeavors, whether they’re getting started or growing.
This year, changes are coming to the SBA program. In recognition of National Small Business Week, we’re breaking down some of those changes and what they mean for borrowers.
What is Changing?
One big shift we’re seeing is a reduced workforce at the SBA. While there is still a local office in Minnesota, fewer people are working there. This could mean longer processing times and a delay in getting answers to questions.
In late 2023, the SBA made some significant changes to its loan programs. But, starting on June 1, 2025, some of the changes will be rolled back, returning to previous policies and procedures. This includes:
- Reducing the threshold for small SBA loans from $500,000 to $350,000.
- Reinstating specific underwriting requirements regardless of loan size.
- Requiring collateral for all loans $50,000 and greater.
- Adding a minimum equity requirement of at least 10% for new businesses and business acquisitions.
- Reinstating fees for loans of all sizes. *
What This Means for Borrowers
For anyone looking to get an SBA loan, it’s important to work with the right financial institution. A lender who isn’t as familiar with the process could slow you down because they may need to rely heavily on the SBA for guidance. But, with the changes and reduced workforce at the local office, it could lead to delays in processing.
Sunrise Banks is a certified preferred lender, meaning we can leverage our experience and in-house underwriting authority to make final decisions on loans without waiting for SBA approval. This allows us to move quickly and decisively, allowing borrowers to obtain capital faster so they can focus on growing their business.
It’s also important to find a lender that knows your community and has an understanding of the industry you’re in. Look at the bank as a whole: What other services and products can they offer as your business grows? Many community banks have a dedicated relationship manager team with a single point of contact, improving communication and helping you grow your business.
Getting an SBA Loan
With an idea in hand, it’s time to get into the loan process. We have seen potential borrowers come in completely unprepared. This makes it difficult for a lender to gauge whether they can approve your loan request. It’s important to do your homework, know your credit status, have a solid business plan and be ready to share your financial information and projections. You should also be able to clearly define your business purpose, your repayment plan and explain your operations. Finally, practice your pitch to make sure you hit all the critical points.
Being declined for an SBA loan isn’t the end of the road. There are other financing options available, such as conventional bank loans, that may be a better fit for your needs. At Sunrise Banks, we’re committed to your success. Thanks to our strong community connections, we can help you explore alternative sources of capital and will do everything we can to connect you with the right resources, even if a loan with us isn’t possible.
We're Here to Help
We always welcome conversations, and we’d love to hear from you. Even if you aren’t quite ready or don’t yet qualify, reaching out to a lender to start the conversation is a great first step. We can help you get the ball rolling, so when you’re ready, we’ll be here to help you reach your goals and realize your dreams.
Visit sunrisebanks.com/sba to review your options and get your loan process started.
Member FDIC / Equal Housing Lender.
*Fees have been reinstated for loans of all sizes:
- For loans of $150,000 or less: 2% on the guaranteed portion.
- For loans greater than $150,000 up to $700,000: 3% on the guaranteed portion.
- For loans greater than $700,000 up to $5,000,000: 3.5% of the guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.