Northeast Bank in Portland, Maine, which has vaulted to the forefront of the rankings as the nation's No. 1 Small Business Administration 7(a) lender over the past 10 months, intends to stay at or near the top of the leader board for the foreseeable future.
"That's the goal, to be long-term No. 1," Luke LaHaie, co-CEO of Newity, the Chicago-based fintech that serves as Northeast's origination machine, told American Banker. "We've staffed up for it. Collectively we probably have 160 or so people that do this full time to be able to process those numbers and a lot of technology to make it efficient."
The $35 billion 7(a) program is SBA's largest, providing loan guarantees up to $5 million. Newity originated about 2,600 7(a) loans totaling $289 million for Northeast during SBA's 2024 fiscal year. For the current 2025 fiscal year, which began Oct. 1, the agency has credited Northeast with 6,900 originations totaling $1.15 billion. The company's ascent has been dramatic, though not unexpected, according to LaHaie.
"Our collective goal has always been to get to the top of the leader board in units," LaHaie said. "Did we think it could happen this year? Probably not. It felt like it could take us another year, just because there were some really entrenched players that have been at the top … for a long time."
Huntington Bancshares was the leading 7(a) lender in fiscal 2024, completing more than 7,500 loans for $1.5 billion. With two months remaining in fiscal 2025, the $208 billion Huntington, based in Columbus, Ohio, has made just over 5,900 7(a) loans for $1.6 billion.
A Huntington spokesperson could not be reached for comment.
Rules change, fundamentals don't
The advances by Huntington and the $4.2 billion-asset Northeast have occurred against a backdrop of dramatic change within 7(a), SBA's oldest and largest lending program. Citing a troubling decline in the state of the program's finances, the agency approved a
In June, SBA unveiled a revised set of standard operating procedures, or SOP, toughening credit and underwriting standards. The rules changes appear to have acted as a brake on 7(a) activity. Originations, which totaled $4.3 billion in May, fell 55% to $1.95 billion in June, making it the first month since October 2023 program-wide lending volume fell below $2 billion.
June's drop notwithstanding, most experts are predicting demand for 7(a) loans will remain robust. Meanwhile, the more rigorous SOP should help circumvent a broad deterioration in loan quality. "The changes are basically a return to the pre-pandemic era," Hovde analyst Brett Rabatin wrote in a July 9 research note. "We believe the prior administration had gotten too loose with both underwriting and fee structures."
Banks that make SBA lending a major line of business anticipate some period of adjustment but no long-term disruption resulting from the regulations. "This is what we do," Live Oak Bank President William Losch said last week on a conference call with analysts. "People understand that when they come to Live Oak, they're going to get a straight answer on 'am I approved' and 'when do I get the money.' … That consistency of execution and how we do business is really driving more activity to us as other players pull back with some of the changes that we've seen."
Northeast and Newity have said the same about the new rules, indicating that they'll experience: temporary choppiness while the organizations adjust but no change to the long-term picture.
"The rules, they definitely are making underwriting more complex than it was in certain cases," LaHaie said. "That will slow us down a little bit, at least the next few months as we adjust. We think practically we can still produce the same volumes; there's just additional steps now the lenders have to take."
"This is an enormous market," Northeast Chief Operating Officer Patrick Dignan said Tuesday on a conference call with analysts. "The same issue is affecting every other lender. "We're pretty confident that we'll be able to navigate through it."
Newity's link to Northeast dates back to 2021, when it partnered with the bank to purchase and service Paycheck Protection Program loans. When the Pandemic-era program, which was administered by SBA, faded, Northeast and Newity made the decision to pivot to traditional 7(a) lending.
SBA lending's emergence at Northeast has provided the company a major new revenue stream to complement its more established focus on commercial real estate. Northeast aims to sell the bulk of its SBA production, and gain-on-sale revenue has risen steadily over the past year, topping $8.2 million in the quarter ending June 30. Total SBA revenue, including interest on loans held in Northeast's portfolio, totaled $12 million for the quarter, up from $2.9 million a year ago.
Northeast's bottom-line net income for the three months ending June 30 totaled $25.2 million, up 67% from a year ago. The result exceeded analysts' expectations by a wide margin, with Rabatin attributing the beat in large measure to SBA. "Although trends were excellent across the board, SBA was the main driver of the beat," Rabatin wrote Monday in a research note.
