Falling SBA fees and faster PLP processing have changed the math. For tickets under $500K with weaker collateral, 7(a) is now structurally cheaper than conventional term once total cost of capital is measured.
SBA 7(a) origination volume is up roughly 18% year-over-year, driven by two structural changes: the SBA's 2025 fee reductions on loans under $500K and materially faster PLP underwriting at the top ten preferred lenders.
For thinly-collateralized borrowers in the $150K to $500K range, 7(a) now consistently beats conventional term once SBA fee discounts, longer amortization (up to 10 years for working capital), and lower covenant burden are factored in.
Strong-collateral, high-FICO borrowers buying revenue-producing real estate or established equipment typically still beat 7(a) on conventional term — particularly when a relationship bank will price inside SBA all-in.
Speed matters too: a clean conventional term sheet can close in 21 days. PLP 7(a) is now under 45 days at top lenders but rarely faster.
Twelve-month default rates on 2026 originations are tracking 80 bps below the 2023 vintage at the same seasoning point, with the largest improvement in services and B2B.
Funders that adopted soft-pull pre-qualification in 2025 are reporting 2.3x higher application-to-funding conversion and materially lower CAC than peers still gating with hard pulls.
Average buy rates across A-paper merchants tightened 9 bps month-over-month as risk-on capital rotated back into short-duration revenue-based product.
