Live Oak Closed $2.8B in SBA Loans

Live Oak Bank was named the leading SBA 7(a) lender in the United States for the fiscal year 2025, securing 2,280 SBA loan approvals and lending over $2.8 billion to small businesses nationwide. This achievement positions Live Oak Bank as the most active lender by dollar amount for SBA 7(a) loans according to official data released by the U.S. Small Business Administration.

• Loan Activity: Live Oak Bank approved 2,280 SBA 7(a) loans totaling more than $2.8 billion in the fiscal year ending September 30, 2025.

• Recognition: The bank's ranking as top SBA 7(a) lender highlights its market leadership and continued commitment to serving American small businesses—offering streamlined processes, deep SBA expertise, and technology-driven solutions.

• Leadership Statements: Company leaders emphasized the importance of the SBA 7(a) program for entrepreneurs, crediting exceptional customer service and technology-forward banking as key factors in supporting small business growth.

• Impact: The approval and funding activity underscores Live Oak Bank’s active role in fueling small business growth and entrepreneurship across the country.

Other top SBA lenders for the 2025 fiscal year included Newtek Bank and Readycap Lending, but Live Oak Bank led the nation in total loan funding for 7(a) loans.

Northeast Bank was mentioned as the leading bank by the number of loan approvals, but Live Oak Bank remains the leader by dollar volume.

What Makes Live Oak Different From Other SBA Lenders?

Live Oak isn't playing the traditional community bank game of lending across every industry. They've built their entire operation around deep vertical specialization in high-performing sectors:

• Veterinary practices

• Dental offices

• Funeral homes

• Pharmacies

• Investment advisors

Each vertical gets dedicated lending teams with genuine industry expertise. This allows Live Oak to underwrite deals faster and more accurately than generalist lenders who are seeing these businesses for the first time. When your underwriter has closed 200 vet practice acquisitions, they know exactly what to look for.

Source: Live Oak Bank Industry Specialization Overview

How Fast Are They Really Approving Loans?

Here's where alternative lenders should pay attention. Live Oak launched "Live Oak Express" for SBA loans under $350,000, powered by generative AI from Casca. They're now approving these loans in days, not the typical weeks or months associated with SBA lending.

The technology stack includes:

• Generative AI for document review and preliminary credit decisions

• Optical character recognition (OCR) for automated financial statement processing

• Cloud-native core banking platform with API-driven workflows

• Digital loan application portals that streamline data collection

This isn't marketing fluff. They've invested heavily in automation that actually reduces underwriting time and cost. Your speed advantage as an alternative lender? It's shrinking fast for deals under $350K.

Source: Live Oak Bank Technology and Innovation

What Does Their Credit Performance Look Like?

Live Oak maintains a 10-year average net charge-off ratio of 0.27%, compared to the SBA industry average of 0.65%. That's less than half the default rate of their peers.

This matters because it shows they're not just moving volume. They're selecting quality credits in industries with strong repayment histories. While alternative lenders often accept loss rates between 8-15% to capture market share, Live Oak is proving you can grow aggressively while maintaining tight credit standards.

Their average loan size is approximately $1.37 million, indicating they're focused on larger, more complex deals rather than competing purely on loan count.

Source: Live Oak Bancshares 2024 ANNUAL REPORT

How Does This Compare to Other Top SBA Lenders?

Northeast Bank led the nation in total number of SBA 7(a) loan approvals for FY2025, but Live Oak dominated by dollar volume. This suggests different strategies: Northeast targets higher volumes of smaller loans, while Live Oak focuses on larger deals with more intensive underwriting.

Other major players like Newtek Bank and Readycap Lending remain active but haven't matched Live Oak's combination of volume, technology investment, and vertical specialization.

Source: SBA FY2025 Top Lender Data

What Should Alternative Lenders Do About This?

Live Oak's success reveals several pressure points for alternative lenders:

Market Compression in Profitable Verticals: The best credits in veterinary, dental, and funeral home sectors are increasingly going to Live Oak at rates alternative lenders can't match. These were historically underserved by traditional banks, creating opportunity for alternative finance. That gap is closing.

Speed Is No Longer Your Moat: When SBA loans under $350K can be approved in days, the traditional alternative lending advantage of fast funding erodes. MCA providers and short-term lenders built their businesses on speed. That differentiator is fading for quality credits.

Technology Investment Matters: Banks are investing millions in AI and automation. Alternative lenders need to either match that investment or accept they'll be competing primarily on credits that can't qualify for SBA financing.

Vertical Expertise vs. Broad Market Coverage: Live Oak's vertical strategy works because deep industry knowledge improves underwriting accuracy and borrower relationships. Alternative lenders need to decide: go deeper in different niches, or accept lower-quality credits across broad markets.

Where Does This Leave the Alternative Lending Market?

SBA 7(a) lending volume serves as a proxy for small business credit demand and banking sector competitiveness. When a single bank moves $2.8 billion in SBA loans with strong credit performance and fast approvals, it signals that traditional banking is getting more competitive in segments alternative lenders depend on.

The opportunity for alternative finance increasingly lies in:

• Credits that don't qualify for SBA lending due to time in business, credit scores, or cash flow volatility

• Speed requirements that still exceed even automated SBA processing (same-day or next-day funding)

• Industries and deal structures outside Live Oak's specialized verticals

• Borrowers who value flexible repayment terms over lower interest rates

Live Oak's performance doesn't eliminate the alternative lending market, but it does compress margins and push alternative lenders toward riskier credits or operational excellence that matches bank-level efficiency.

Additional Reference: Small Business Administration 7(a) Loan Program Overview

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