If you need a major cash infusion to take your small business to the next level, Live Oak Bank is a good option for obtaining Small Business Administration loans.
Live Oak may be right for your business if you:
Need capital for a major expansion: The bank offers SBA loans of up to $5 million. Borrowers typically use proceeds to expand operations or acquire other companies.
Are an established business with strong financials: To qualify for a loan, your business must have strong enough cash flow to cover loan payments, without any bankruptcy history or outstanding tax liens.
Are in one of the industries the lender focuses on: Live Oak lends in several select industries, including agriculture, healthcare and wine/craft beverage.
» MORE: Compare long-term business loans
In this article:
Reasons to use Live Oak Bank
The guidance of an experienced SBA lender
Live Oak Bank perennially ranks among the highest-volume lenders in the SBA 7(a) program.
The bank focuses on offering SBA loans to businesses in specific industries, some of which other lenders don’t serve. They are:
The bank has a team of financing specialists dedicated to each industry, so when you apply for a loan, you’ll be working with people familiar with your industry as well as the SBA process.
Live Oak Bank also offers non-SBA commercial loans, but these make up a small fraction of its financing. And it offers federally guaranteed loans from the U.S. Department of Agriculture geared to farms and other rural small businesses.
Faster application process than traditional banks
With the help of web-based tools, Live Oak Bank takes an average of 45 days to process an SBA loan application. That’s faster than traditional banks, where the process can take more than three months.
InExpensive financing for high-value SBA loans
Live Oak Bank’s average SBA loan size in 2016 was $1.1 million, according to its annual report. The bank offers an annual percentage rate, which includes all loan fees, as low as 5.75%. The maximum APR is 7.75%, according to the bank. For an SBA loan of more than $50,000 paid over 10 years, the APR is the current prime rate plus a spread of up to 2.75%, or 6.5%. That’s tough to beat, especially for loans of more than $1 million.
- Businesses looking for SBA loans of up to $5 million
- Growing businesses with strong financials
- Businesses in these industries: Accounting and tax firms, agriculture, educational services, family entertainment centers, funeral homes, government contracting, healthcare and dental, hotels, Insurance, investment advisory, pharmacy, renewable energy, self-storage, senior care, veterinary, wine/craft beverage
Where Live Oak Bank falls short
Only certain industries qualify
If your small business is in trucking, information technology, janitorial services or a number of other industries, Live Oak Bank is not an option. The lender serves only the industries listed above.
Stringent SBA requirements
Live Oak Bank uses its online platform to streamline the SBA loan application process. However, you still have to meet the SBA’s requirements and provide a long list of documents and information.
Here are documents to gather before applying to Live Oak:
- Three years of business tax returns
- Three years of personal tax returns
- Year-to-date profit and loss statement, and balance sheet
- Debt schedule if you are an existing business
- Promissory note if you are refinancing an existing loan
- Purchase agreement or letter of intent if purchasing
- Estimate/bid if you’re considering construction
Longer process than other online lenders
Getting an SBA loan within 45 days is an accomplishment. But you may need financing more quickly to deal with an emergency or pounce on an opportunity. In that case, Live Oak Bank wouldn’t be a good option.
Compare Live Oak Bank with other lenders
If you want to compare Live Oak Bank with other lenders, use NerdWallet’s small-business loan tool. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Updated July 21, 2017.
NerdWallet staff writer Steve Nicastro contributed to this report.