The Small Business Administration’s (SBA) Preferred Lender Program (PLP) is a selective designation granted to experienced lenders who have demonstrated expertise and reliability in processing SBA-guaranteed loans. PLP lenders have the delegated authority to make final credit decisions for SBA 7(a) loans without needing prior SBA approval, significantly streamlining the loan application process.
How the SBA Preferred Lender Program Works
Typically, SBA loan applications go through a two-step process where the lender reviews and packages the application, then submits it to the SBA for final approval. This traditional route can delay funding by several weeks or months.
PLP lenders, however, handle the entire approval process internally. After thorough due diligence—including evaluating your business plan, financial records, and creditworthiness—they make the final credit decision. The SBA provides the loan guarantee but trusts the lender’s decision, eliminating the need for a separate SBA review.
Benefits of Using a PLP Lender for Your SBA Loan
- Faster Approval and Funding: Removing the SBA’s review step typically reduces processing time from 60–90+ days to around 30 days or less.
- Expertise and Guidance: PLP lenders have in-depth knowledge of SBA loan requirements which improves your application’s chances and helps avoid common pitfalls.
- Greater Certainty: Since PLP lenders pre-screen applications rigorously, if they approve you, it’s a strong sign your loan will close successfully.
Who Can Access Loans Through a PLP Lender?
The PLP designation applies to lenders, not borrowers. You become a PLP borrower simply by applying for an SBA loan at a PLP-approved financial institution. You must still meet all SBA loan eligibility requirements such as operating for profit in the U.S., invested equity, and demonstrating business need.
Comparing Standard SBA Lenders and PLP Lenders
| Feature | Standard SBA Lender | Preferred Lender (PLP) |
|---|---|---|
| Decision Authority | Requires SBA final approval | Lender has final approval authority |
| Approval Timeframe | Often 60–90+ days | Typically under 30 days |
| SBA Involvement | Reviews every loan | Monitors post-approval |
| Lender Expertise | Varies widely | High and consistently proven |
Tips for Applying with a PLP Lender
- Use the SBA’s Lender Match tool to find PLP lenders near you.
- Prepare a comprehensive application including business plans and financial statements.
- Communicate clearly with your lender to understand their specific process and expectations.
Frequently Asked Questions
Are SBA loans through PLP lenders more expensive? No. Interest rates and fees are capped by the SBA regardless of lender status.
Does working with a PLP lender guarantee loan approval? No. Approval depends on meeting credit and eligibility criteria.
What is the difference between PLP and SBA Express loans? PLP is a lender designation for SBA 7(a) loans, allowing delegated approval authority. SBA Express is a separate loan program with faster SBA response times but smaller loan amounts (up to $500,000).
For more detailed information, visit the official SBA page on Preferred Lender Program and explore our related SBA Loan article to understand SBA loan types and guidelines comprehensively.
