Black Owned Business Lending Crossed Fourteen Billion in Q1 and SBA Numbers Show Why

First quarter Small Business Administration data released this week shows Black owned business lending crossed $14 billion for the first time in any quarter. The previous record was $8.4 billion in the third quarter of 2025. The new figure represents 14.7 percent of total SBA lending volume, up from 9.2 percent two years ago. The increase ran across both the 7(a) program, which supports general business operations, and the 504 program, which finances commercial real estate and equipment.

The 7(a) volume to Black owned businesses hit $9.8 billion in the quarter, with an average loan size of $284,000. The 504 program added $4.2 billion with an average loan size of $612,000. Default rates on both portfolios run below the program average, which lenders cite as evidence that underwriting has caught up to a borrower base that was previously underserved. The 90 day delinquency rate on Black owned 7(a) loans is 4.1 percent, compared to 4.4 percent across the full 7(a) portfolio.

Three lenders accounted for 41 percent of the volume. Live Oak Bank funded $1.84 billion across 287 loans. Newtek Bank funded $1.62 billion across 412 loans. Huntington National funded $1.41 billion across 184 loans. Live Oak's average ticket runs higher because it specializes in healthcare practice acquisitions and franchise resales. Newtek operates a high volume small ticket model. Huntington's volume came largely from Ohio, Michigan, and Tennessee.

The franchise resale category drove a notable share of the increase. The International Franchise Association reported 4,847 franchise resales in the first quarter, with 1,247 going to Black owners. That translates to a 25.7 percent share of franchise resales going to Black owners, up from 11.4 percent in 2023. SBA 7(a) financing covered 73 percent of those resales. The most common resale categories were quick service restaurants, fitness studios, and tax preparation offices.

Tennessee posted the strongest year over year growth. Black owned business lending in the state hit $487 million in the first quarter, up 178 percent from the $175 million recorded in the first quarter of 2025. Memphis accounted for $187 million of the Tennessee figure. Nashville accounted for $147 million. The Nashville Black Chamber of Commerce, which connects entrepreneurs to lenders, processed 1,847 referrals in the quarter. The chamber's executive director noted that pre approval volume runs three to four times higher than approved loan volume, which means roughly seven thousand businesses started the process.

The build up to this point took several years of pipeline work. The Treasury Department's State Small Business Credit Initiative deployed $1.3 billion in funds specifically for socially and economically disadvantaged borrowers between 2022 and 2025. The Minority Business Development Agency funded business centers in 47 cities. Goldman Sachs's One Million Black Women initiative committed $10 billion in capital and is at $4.7 billion deployed through this quarter. None of these programs operate in isolation but together they built the underwriting infrastructure that the first quarter numbers reflect.

Personal guarantees and collateral requirements remain the friction point that founders mention most often. The standard SBA 7(a) loan requires a personal guarantee from any owner with 20 percent or greater stake. Real estate collateral is required for loans above $350,000. Black founders are roughly twice as likely to lack the personal real estate that lenders prefer for collateral, which compounds the underwriting friction. The 504 program reduces this friction because the financed real estate becomes the collateral.

D U N S numbers and PAYDEX scores still matter for vendor financing even when the SBA loan is the headline. A founder with a PAYDEX score of 80 or higher can access trade lines from Quill, Uline, Grainger, and Crown Office Supplies on net 30 terms. Building those trade lines for six months before applying for an SBA loan strengthens the file. Home Depot, Lowe's, and Staples extend store credit at 9 to 18 months of business credit history. The pattern shows up in stronger SBA approval rates for borrowers who walked in with established business credit.

Nashville's Lumina Media is one example of a videography business that built the trade line foundation before approaching the SBA. The Lumina case is not unusual. Service businesses with under $300,000 in annual revenue can build sufficient credit to qualify for $200,000 to $400,000 in SBA backed working capital within 18 to 24 months. The first quarter numbers suggest that the path is being walked at scale for the first time. The second quarter data, due in late July, will show whether the pace continued or slowed.