5 Minutes in the Lower Middle Market
5 Minutes in the Lower Middle Market is a short daily podcast on the best ideas, lessons, and signals in the world of small business acquisitions, holdcos, private equity, and operating companies. In five minutes or less, it helps buyers, operators, and investors get sharper on what actually matters in the lower middle market.
5 Minutes in the Lower Middle Market
The $727B Market Behind Small Business Acquisitions
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In this episode of 5 Minutes in the Lower Middle Market, we look at SBA lending through the SBA Loan Intelligence Database from MA Labs.
The big takeaway: SBA lending is not a niche corner of small business finance. With 2.1 million loans since 1992, $727 billion in gross approval volume, and hundreds of thousands of active loans today, SBA financing is one of the backbones of the U.S. small business acquisition market.
0:00 The SBA market is bigger than most people realize
0:26 2.1 million SBA loans and $727B in approval volume
1:45 Why active SBA loans matter today
2:07 SBA loan pricing and why context matters
2:48 Why SBA lending is the backbone of small business acquisitions
Welcome to five minutes in the lower middle market, where I break down the best ideas on buying, building, and owning small businesses. And today's episode is based on the SBA loan intelligence database from Maseka Labs. And the big takeaway: the SBA market is bigger, more proven, and more durable than a lot of people realize. And according to the site, the dataset covers 2.1 million SBA loans since 1992, totaling 727 billion in cross-approval volume. The average loan size across program is about 340,000 US dollars. Again, if you spend enough time around search funds, ETA, and lower middle market deals, it can start to feel like SBA lending is just a niche corner of finance, but it really isn't. It's a huge part of acquisition ecosystem for small businesses in the US. And the second thing that stood out to me is that the repayment picture is better than many people might assume. Maseka says that across all SBA loans since 1992, 58.9% have been paid in full, while 10.7% were charged off. And the site also shows a broader default rate figuring of 12.4% of dispersed loans charged off. That does not mean SBA debt is risk-free. It clearly is not.6% of all loans in the dataset. That matters because it reinforces how live this market still is. This is not just historical data, it is the current operating system for thousands of borrowers, lenders, and acquisition happening across the country. Another useful number is uh pricing. Maseka reports that an average interest rate of 7.38% for seven-year loans with uh reported rates. Again, that number on its own does not tell whether any individual loan is good or bad, but it does remind you that one of the most important parts of SBA borrowing is context. Loan size matters, year matters, program matters, fixed versus variable matters, term matters, obviously industry matters, and lender choice matters. The site is built around exactly that idea with tools for comparing rates, evaluating risk, and comparing lenders. If I had to pull one lesson from this data, it would be that SPA lending is not a side story in the lower middle market. It's really part of the backbone. Millions of loans, hundreds of billions in volume, more than half paid in full, and a still active market supporting small business owners across every state. If you buy, operate, or finance small businesses in the US, understanding SBA data is not optional. It is part of understanding the game and the whole market. So that's it for today's five minutes in the lower middle market, and talk to you again tomorrow.