Live Oak Bank
best for
- Businesses looking for SBA loans of up to $5 million.
- Growing businesses with strong financials.
- Businesses in these industries: agriculture/poultry, dental, family entertainment centers, funeral service, hotels, insurance, investment advisory, medical, ophthalmic, pharmacy, self-storage, veterinary and wine/craft beverage.
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 SBA loans of $1 million or more. It’s not for all types of businesses, however. To qualify, your business must be focused on one of 13 industries.
The Wilmington, North Carolina-based bank specializes in Small Business Administration loans of up to $5 million, which borrowers typically use to expand operations or acquire other companies. It’s a nontraditional bank, with no branches, and conducts much of its operations online, using technology to streamline the SBA loan approval process.
If your financing needs are smaller, Live Oak Bank also offers SBA loans of $75,000 to $350,000.
In this article:
Where Live Oak Bank falls short
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Before you apply for a Live Oak Bank loan, find out whether you meet the minimum qualifications.
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Reasons to use Live Oak Bank
The guidance of an experienced SBA lender: Live Oak Bank is second only to Wells Fargo in dollar volume loaned through the SBA program. Through the second quarter of fiscal year 2016, it has underwritten nearly 500 SBA loans, worth roughly $582 million, according to the federal agency.
Live Oak Bank also offers non-SBA commercial loans, but these make up a small fraction of its financing. The bank focuses on offering SBA loans to businesses in the 13 industries shown above, some of which other lenders don’t serve. 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.
“When you specialize in something, you become efficient,” says Steve Smits, chief credit officer for Live Oak Bank. “Because we do it every day and we have professionals and specialists, we tend to be more responsive and quicker.”
Live Oak also 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.
Least expensive financing for high-value SBA loans: Live Oak Bank’s average SBA loan size in 2015 was $1.1 million, according to a regulatory filing. The bank offers an annual percentage rate, which includes all loan fees, as low as 5.5%. The maximum APR is 7%, 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 6.25%. That’s tough to beat, especially for loans of more than $1 million.
Appealing for established businesses with strong, steady cash flow: Live Oak Bank will focus mainly on the strength of your small business, particularly your cash flow. Smits says the bank looks closely at whether a business has enough cash flow and revenue to make its loan payments.
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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 13 industries: agriculture/poultry, dental, family entertainment centers, funeral service, hotels, insurance, investment advisory, medical, ophthalmic, pharmacy, self-storage, veterinary and wine/craft beverage.
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 quicker 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.
Compare business loans
NerdWallet staff writer Steve Nicastro contributed to this report.
Benjamin Pimentel is a staff writer at NerdWallet, a personal finance website. Email: bpimentel@nerdwallet.com. Twitter: @benpimentel.
For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
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