Most small business lenders are well aware that the SBA is a cornerstone in financing sectors like franchised hotels, restaurants, childcare, and fitness. These industries regularly leverage SBA loans, and 2024 shows no deviation from this trend. However, what might come as a surprise to many brokers are the sectors that see the highest average approval levels from the SBA. This is crucial knowledge because, while SBA deals can be time-consuming and require more effort to complete, they can drive strong fee income if large enough.
The following article profiles the top 10 sectors that see the highest average approval amounts from the SBA, outlining how small business lenders can maximize their time return on investment (ROI) by focusing on these industries with larger loan amounts.
- Motor Vehicle Body Manufacturing
- Average Approval Amount: $5,000,000
- Opportunity for Lenders: This sector consistently receives large SBA loans, driven by the capital-intensive nature of manufacturing vehicles and related components. Brokers can focus on manufacturers who need to upgrade or expand facilities, purchase new equipment, or manage working capital needs, knowing these deals can be lucrative.
- Rope, Cordage, Twine, Tire Cord, and Tire Fabric Mills
- Average Approval Amount: $5,000,000
- Opportunity for Lenders: Another heavy manufacturing sector, businesses in this space often require substantial capital for machinery, raw materials, and production facilities. With high average approval amounts, brokers can focus on securing long-term, larger-scale financing for these businesses to maximize their earnings.
- Specialty Healthcare Facilities (except Psychiatric and Substance Abuse)
- Average Approval Amount: $5,000,000
- Opportunity for Lenders: Specialized healthcare facilities have seen rising demand, particularly those offering niche medical services. SBA loans in this sector often go toward real estate purchases, equipment, and expansion, and brokers who target these borrowers can tap into higher-value deals with strong approval odds.
- Administration of Air and Water Resource and Solid Waste Management Programs
- Average Approval Amount: $4,500,000
- Opportunity for Lenders: With the increasing focus on environmental sustainability and regulations, this sector is gaining momentum. Companies in this space often require significant capital to comply with regulatory changes or upgrade their operations, providing brokers an opportunity to handle larger deals with long-term environmental impacts.
- Roofing, Siding, and Insulation Material Merchant Wholesalers
- Average Approval Amount: $3,916,900
- Opportunity for Lenders: These wholesalers play a critical role in construction and renovation, which remains a strong sector. Brokers working with these businesses can capitalize on SBA loans used for inventory purchases, expansion of operations, or facility upgrades, driving substantial loan sizes.
- Other Motor Vehicle Dealers
- Average Approval Amount: $3,884,400
- Opportunity for Lenders: With continued demand for vehicles, motor vehicle dealers, particularly those outside of mainstream dealerships, present an opportunity for larger SBA loans. Financing is often used for expanding inventories, acquiring property, or developing service centers.
- Power and Communication Line and Related Structures Construction
- Average Approval Amount: $3,750,000
- Opportunity for Lenders: The infrastructure industry, particularly in power and communication lines, requires massive capital investments, making it ideal for large SBA loans. Brokers can engage companies seeking to expand operations, upgrade technology, or invest in large-scale infrastructure projects.
- Oil and Gas Pipeline and Related Structures Construction
- Average Approval Amount: $3,676,900
- Opportunity for Lenders: With ongoing energy demands, this sector remains crucial, and financing needs are typically large. Brokers who work with companies in this space can benefit from high-value loan approvals, particularly for projects related to pipeline construction, maintenance, and expansion.
- Electrical Contractors and Other Wiring Installation Contractors
- Average Approval Amount: $3,511,800
- Opportunity for Lenders: Electrical contractors are vital to the construction and renovation industry, and with more projects underway, their need for capital has grown. SBA loans in this sector often go toward equipment purchases, real estate for new facilities, and expansion efforts, offering brokers substantial deals.
- Pharmaceutical and Medicine Manufacturing
- Average Approval Amount: $3,500,000
- Opportunity for Lenders: The pharmaceutical sector remains a top player in SBA approvals due to its high capital requirements. Whether for expanding production capacity, acquiring new technology, or managing regulatory compliance, brokers targeting this sector can secure large, long-term financing deals.
Maximizing Time ROI in High-Approval Sectors
Focusing on sectors with higher average approval amounts is an efficient way for small business lenders to maximize their time and efforts. SBA loans are known for being more complex, with longer closing times and stricter documentation requirements, but the potential payoff in these industries can be substantial. By targeting sectors with strong approval records and larger loan amounts, brokers can ensure that the deals they work on are not only more likely to close but also offer higher fee income.
Key Takeaways for Brokers:
- Target High-Capital Sectors: Focus on industries with larger capital needs, such as manufacturing, infrastructure, and specialized healthcare, where SBA loans tend to be higher in value.
- Leverage SBA Programs for Growth: Although SBA loans take more time and effort, they can be a reliable source of significant revenue if brokers prioritize sectors where approval rates and loan amounts are consistently higher.
- Understand the Market Needs: Brokers who position themselves as experts in these top sectors can attract more clients, secure larger deals, and differentiate themselves from competitors who may focus on lower-value loans.
By concentrating efforts on industries with higher approval averages, brokers can maximize their time ROI and secure more profitable deals, despite the longer timelines associated with SBA lending.
