The Biggest SBA Lender in the Country
Based in North Carolina, Live Oak has no branches and says it actually wants to work with small businesses. Its average loan is for $1 million.
Good Morning!
Here are today’s highlights:
Lou Mosca says he’s hearing from more owners who say they’re thinking about quitting.
The latest version of Opportunity Zone tax breaks encourages investments in rural areas.
Chinese manufacturers are finding ways to minimize the tariffs.
There’s a real company that helps job applicants obtain fake references.
FINANCE
A relatively small, branchless bank in North Carolina, Live Oak Bancshares, does a lot of small business lending: “Since 2017, it has issued $15.4 billion in government-backed 7(a) loans, more than any other bank in the country including the aforementioned Wall Street heavyweights. The 7(a) program is the Small Business Administration’s flagship offering, designed to help small businesses that might not qualify for conventional credit. Live Oak’s average loan is just $1 million, chump change for bigger, brand name competitors, but the lender does around $2 billion a year in SBA loans, plus another $3 billion in conventional small business loans.”
“Live Oak doesn’t look or act like a typical bank—and that’s the point. Its 85-acre campus in Wilmington is surrounded by longleaf pines, not oaks, an arboreal misnomer no one seems bothered by. The four main buildings are styled more like a Silicon Valley startup than a bank, with cypress siding, exposed wooden beams, and not a marble column or rolltop desk in sight.”
“Live Oak has no branches. All deposits come in online. And while most people think of small business lending as a handshake deal at the local bank down the street, Live Oak has flipped that on its head. It leans on tech, instead of geography with a fintech venture arm called Live Oak Ventures and a track record that includes spinning out the $3.4 billion market capitalization cloud-based banking software firm nCino. That edge in technology helps it approve loans faster. Which means it can make more of them.”
“Loan officers don’t earn commissions, a move designed to avoid conflicts between sales and credit. The bank also doesn’t try to be everything to everyone. It sticks to industries where it has subject matter expertise. The bank started by lending to veterinarians because its CEO Chip Mahan’s stepfather is a well-known equine vet. Today, Live Oak focuses on 35 industry verticals, including home health care, funeral homes, and auto repair.”
“Mahan built the bank around a simple premise: lend to the people big banks overlook. ‘I don’t think JPMorgan cares about the female veterinarian doing a million and a half in revenue in every town in America,’ he says. ‘But we do.’” READ MORE
