Established in 2008, Live Oak Bank is an FDIC-insured bank headquartered in Wilmington, North Carolina. The bank has nearly 500 full-time employees and has provided more than $2 billion in loans and/or leases since it opened. Live Oak Bank generally provides SBA loans to qualified small businesses. They can offer loans to customers in all fifty states, and they pride themselves on being less traditional than their competition, offering both speed and convenience. Because they are relative newcomers in the small business lending space, they make their services available to 21 specific industries. Interestingly, when the bank first started lending, they provided loans to veterinary practices only.
Currently, Live Oak Bank is a Preferred Lender (or PLP) with the US Small Business Administration; they have closed more than $850 million in SBA loans. They are available to work with individuals, broker or intermediaries for a whole host of purposes, including business acquisition, expansion, real estate purchases or refinances, and partner buyouts to name a few.
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- Fast turnaround time from application to funding on term loans
- Willing to refinance existing debt for certain industries
- Has dedicated lending teams for specific industries
- Streamlined the process for SBA loans
- Able to provide loans to business of all sizes
- Types of loans that may be offered are limited and industry-dependent
- Lending is restricted to specific industries
- Lack of clarity on interest rates, fees, loan structure, etc.
Live Oak Bank can offer SBA loans in amounts which range from as low as $75,000 to as much as $7.5 million, with terms that can extend out to 25 years. Depending upon the industry, like government contractors for example, they are also able to offer SBA line of credit financing. The Live Oak Small Business website does not provide any specific (or even general) idea of loan amounts and terms. They do point out that the amounts available to loan and the term lengths are dependent upon the industry the small business is in and the amount needed.
In general, a small business will have had to be in operation for a minimum of three years to obtain term loan financing from Live Oak Bank. However, they do not provide any other guidelines regarding the credit score, need for a personal guaranty, collateral, or income, nor do they disclose the terms and applicable interest rates. They do acknowledge on their website that they base their decisions on your business cash flow, but little more than that is disclosed.
Where they are clear is the 21 specific industries that they are willing to work with, which are varied but not all encompassing. To name a few, the industries include those related to finance (e.g., insurance, accounting, tax firms, investment advisory), healthcare (e.g., fitness centers, pharmacies, senior care, healthcare, veterinary services), technology and broadband, educational-related, agriculture, automotive, hospitality services (e.g. hotels, restaurants, wine and craft beverages).
The best place for a potential borrower to start is the Live Oak Bank website’s small business loan page. From there, you can better see the industries they lend to, and click through to the types of loans or lines of credit that will be available to them, as well as the information needed to begin the process. They encourage potential borrowers to contact the SBA loan officer referenced on the individual industry page (because that will be their “specialist” lender) to obtain further information.
For an SBA loan, Live Oak is a little more forthcoming. In general, a small business borrower approved for an SBA loan can obtain up to $5 million with a term length of up to 25 years. The collateral is typical of most SBA loans, i.e. a lien on inventory, equipment and/or commercial real estate. There is an SBA Origination Fee which can range from 0 to 3.5%, and the bank may also impose a fee.
As an SBA Preferred Lender, Live Oak Bank can often streamline the process of obtaining SBA backed funding, with time from application process to funding taking less than two months in some cases. They are familiar with all of the SBA loans, including the more popular 504 and 7(a) loans, which could result in a better rate and term structure for the borrower.
Rates and Fees
Given the variety of industries that Live Oak Bank is able to work with, and the applicable parameters within each industry, there is no one-size-fits-all rate or fee structure. Each loan or line of credit will be tailored to the industry in which it operates. In some cases, some types of loans or lines of credit will not be available. For example, in the entertainment industry, Live Oak Bank can provide financing for expansion, construction, remodeling, refinancing or equipment, while in the funeral homes and cemetery industry they can provide financing for acquisition, inventory, or construction. Government contractors can obtain acquisition or purchase order financing, as well as a line of credit while service contractors are free to apply for a contractor loan (HVAC, plumbing, electrical or restoration, cleaning).
While Live Oak Bank does not openly disclose their rates, it was learned that they do use the Annual Percentage Rate or APR to define borrowing costs, something that many other online borrowers do not use. The APR, which includes all rates and fees, is the best and clearest metric used to make a comparison of a loan’s cost. Historically, Live Oak Bank’s SBA loans have had APRs which ranged from 5.50% to 7.75%.
Live Oak Bank doesn’t highlight the borrower qualifications for its loans as clearly as other lenders do, but it does offer very helpful resources for small business owners that want to learn more. The information is found stuffed at the bottom of the SBA loans page and is referred to as a “resource center”. Included in the information provided is a page about what documents prospective borrowers will need, how to understand your credit score and how to write an effective business plan. There is also a page that dispels myths about SBA lending so that borrowers will understand exactly what they will be getting into if they are approved.
In general, SBA loans have specific requirements, which are surely relevant to Live Oak Bank borrowers. These borrower qualifications include:
- More than 2 years in business
- Minimum income of $30,000 per month
- Owner’s personal credit score must be above 650
- Business must be in one of the 21 approved industries listed on the Live Oak Bank website
- No bankruptcies within the past 3 years
Live Oak Bank has made the process simple; depending on your preferences, you can begin the application online, submit a request for a call from one of their loan specialists, or call one of their specialists directly. The loan decision can take as few as 10 days; however, prospective borrowers should be aware that the SBA’s process from application to funding can take a month or more. Moreover, the documentation that they require is extensive and should be made available early on in the process so as not to delay the decision. Live Oak Bank has a helpful blog post about the things you would need to consider and have handy before you embark on the process for an SBA loan.
Help & Support
Live Oak Bank has specialized teams at the ready for prospective borrowers. They have experts within each industry who deeply understand the particular needs each borrower may have, and who can help them to streamline the application process. From the Small Business Loan Industry Focused Lending page, you are able to find a whole host of resources particular to the field or industry in which your business operates. Their staff is available to answer generalized questions each weekday, Monday through Friday, 9 am to 5 pm either by phone, fax or email. For more specific needs, an industry specialist can be requested specifically.
Among US banks, Live Oak Bank received a 5-star rating from Bankrate based on the key criteria, i.e. safety and soundness. Unfortunately, there are very few reviews on social media websites which can provide value as to Live Oak Bank’s small business loans. However, one reviewer who posted earlier this year said that the process for her to finance and renovate an “escape room” in her laser tag facility was a great and easy experience.
If you are looking for SBA financing and fall into one of the 21 industries that Live Oak Bank lends to, then putting in an application for an SBA loan would seem to be a no-brainer. They have been able to make the process as fast and painless as possible, especially given the “hoops” one must typically jump through for an SBA loan. While the bank’s website is not exactly forthcoming as regards their loan offerings, terms and rates, the idea of a whole team dedicated to niche financing within your industry is very appealing; simply put, it is comforting to know that a lender really does understand your needs, specifically.