From 1 October 2023 to 30 June 2026, SBA lenders approved 2,049 7(a) loans in Tennessee worth $1.17 billion. The median loan was $230,000, well above the national median of $150,300, and the median rate at approval was 10.25%, the same as nationally. Start-ups took 23.9% of loans and franchises 19%, and the top industries were restaurants, fitness centers and snack bars. Acquisitions made up 10.8% of loans at a median of $814,500. An established Tennessee company should seek lenders that underwrite historical cash flow, not new units.
| Measure | Tennessee | All industries |
|---|---|---|
| SBA 7(a) loans approved | 2,049 | 162,355 |
| Median loan | $230,000 | $150,300 |
| Middle half of loans | $75,000 – $558,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 15.9% | 12.9% |
| Median rate at approval | 10.25% | 10.25% |
| Middle half of rates | 9.49% – 11.25% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 222 (10.8%) | 16,849 (10.4%) |
| Median acquisition loan | $814,500 | $693,000 |
| Lenders that made these loans | 169 | 1,648 |
| SBA 504 loans (real estate, equipment) | 66 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- 7(a) loans approved
- 2,049, worth $1.17 billion (1 Oct 2023 – 30 Jun 2026)
- Median loan
- $230,000 (national: $150,300)
- Median rate at approval
- 10.25%, middle half 9.49% to 11.25%
- Start-ups / franchises
- 23.9% / 19% of loans
- Acquisition loans
- 222 (10.8%), median $814,500 at 9.5%
- SBA 504 loans
- 66, median $1,167,500
Tennessee's loans run large
Tennessee borrowers took big SBA loans. The median approval was $230,000, the middle half ran from $75,000 to $558,000, and one loan in ten was larger than $1,605,560. 325 loans, 15.9% of the total, were $1 million or more. Only 23.2% went through SBA Express, the program for loans up to $500,000, so most Tennessee borrowers went through a full 7(a) credit review.
| Measure | Tennessee | National | Reading |
|---|---|---|---|
| Median 7(a) loan | $230,000 | $150,300 | Build-outs, acquisitions and real estate push the typical loan up. |
| Median rate at approval | 10.25% | 10.25% | Pricing matches the national median; the middle half ran from 9.49% to 11.25%. |
| Acquisitions as a share of loans | 10.8% | 10.4% | Buying a company is about as common as it is nationally. |
Only 14.5% of loans were fixed-rate. The rest move with the base rate, within SBA's caps: the base rate plus 6% on loans from $50,001 to $250,000, where the Tennessee median sits, and plus 3% above $350,000. SBA loan rates sets out every tier. 169 lenders approved at least one Tennessee loan in the period.
A market shaped by new units
The top five Tennessee industries by loan count were limited-service restaurants (81), full-service restaurants (81), fitness and recreational sports centers (68), residential remodelers (59) and snack and nonalcoholic beverage bars (54). Four of the five are consumer concepts that are often franchised, and the program-level figures agree: franchises took 19% of Tennessee loans and start-ups 23.9%, so nearly one loan in four financed a business with little or no operating history.
That shapes where a file lands. Lenders that specialize in new franchise units know the brands, lean on system-wide performance and the operator's experience, and underwrite a projection. For those loans SBA requires an equity injection of at least 10% of total project costs, the brand must be eligible under SBA's rules, and lenders want the lease to run as long as the loan. The limited-service restaurants, fitness centers and snack and beverage bars pages cover those industries' figures.
If your company already has years of returns behind it, the lender that finances new units may be the wrong first call.
How an established company is read differently
A distributor, manufacturer or services company with years of returns is a different credit from a new franchise unit, and the lender that is expert in one is not always good at the other. A file sent to the wrong program is not declined because the business is weak; it is declined because it sits outside that lender's box.
| New franchise unit or start-up | Established Tennessee company | |
|---|---|---|
| What repays the loan | A projection, supported by the brand's system performance | Historical earnings, shown on tax returns and financial statements |
| What the lender tests hardest | Operator experience and the equity injection | Debt service coverage after the owner's salary, and whether add-backs are real |
| Collateral | Build-out and equipment, often worth little in a sale | Receivables, inventory, equipment and sometimes real estate |
| Where it can go besides SBA | Few places; SBA is usually the route | Conventional term loans, asset-based lines, equipment finance |
| What weakens the file | Thin experience, a lease shorter than the loan | Customer concentration, a single strong year, figures that don't tie to returns |
For the established company, SBA's floor is debt service coverage of 1.15x, and conventional banks commonly look for at least 1.25x. A business that earns 1,250 against loan payments of 1,000 is at the conventional line. Debt service coverage and global cash flow explain how lenders run the test.
Tennessee taxes and the cash-flow math
Tennessee does not tax wages, but it does tax most businesses. The state's franchise and excise taxes apply to corporations, LLCs, limited partnerships and most other entities with limited liability, including those whose income passes through to the owners for federal purposes. A lender treats those taxes as a cash cost of the business, paid before debt service.
Two consequences follow. First, the excise tax is a tax on earnings, so it is easy to leave out of an EBITDA figure, which is struck before taxes. A lender measuring cash available for debt service subtracts the taxes the business actually pays, so a Tennessee company's coverage is measured after its entity-level state taxes; a model that ignores them overstates coverage, and the lender will notice. Second, the owners' personal cash flow benefits from the absence of a state tax on wages, which helps the global cash flow test SBA lenders run across the business and its owners, where SBA looks for at least 1.0x.
Acquisitions, and the 504 gap
Tennessee lenders approved 222 acquisition loans, 10.8% of the state's total, at a median of $814,500 and a median rate of 9.5%. A complete change of ownership needs equity of at least 10% of total project costs. A seller note counts for up to half of that only on full standby for the life of the SBA loan; a note that pays is debt. SBA prohibits an earnout to the seller, and requires an independent business valuation where the amount financed, less appraised real estate and equipment, exceeds $250,000. From 1 October 2026, under SOP 50 10 8.1, a change of ownership must show 1.25x coverage on historical results, financial due diligence is required on every change of ownership, a quality of earnings report is required on acquisitions of $3 million or more excluding real estate, and amortization is capped at 10 years except the real estate share. See how SBA 7(a) loans finance an acquisition.
The 504 figures stand out for how few there were: 66 loans, at a median of $1,167,500. The figures do not say why; owners buying property may be using 7(a), which runs up to 25 years on real estate, or conventional mortgages, with 504 reserved for larger projects. 504 is worth a look on any owner-occupied building: it typically splits the project 50% bank, 40% CDC and 10% borrower, and the borrower must occupy at least 51% of an existing building. SBA 7(a) vs SBA 504 compares the two.
Putting a Tennessee file in front of the right lenders
Transparent's lender book holds 1,800+ lenders: 278 write SBA 7(a) and 504, 1,148 write conventional term and private credit, and 235 write asset-based loans and lines. That lets an established Tennessee company compare an SBA offer with conventional ones on the same file, and reach SBA lenders whose programs are built for companies with history rather than new units.
- Two to three years of business and personal tax returns, with the franchise and excise returns alongside
- A P&L, a year-to-date P&L through last month-end, and a balance sheet
- A debt schedule with copies of any notes being refinanced
- A personal financial statement for each 20%+ owner, each of whom will guarantee the loan
- For remodelers and other contractors, the state license record; for acquisitions, the target's latest full year of figures and the letter of intent
Once those documents are in, Transparent builds the full lender package, a financing model, lender presentation, blind teaser and underwriting memo, in a day; built by hand, the same package takes at least a week. Transparent charges nothing before a loan closes, and on SBA loans the lender pays Transparent, not the borrower. How we underwrite explains what lenders see.
Common questions
- What is the typical SBA loan in Tennessee?
- The median Tennessee 7(a) loan approved from October 2023 to June 2026 was $230,000, against a national median of $150,300. The middle half ran from $75,000 to $558,000, and acquisition loans had a median of $814,500.
- What rate do Tennessee SBA loans carry?
- The median rate at approval was 10.25%, the same as nationally, with the middle half between 9.49% and 11.25%. Acquisition loans, which are larger and fall under SBA's lowest cap, had a median of 9.5%.
- Do lenders count Tennessee franchise and excise taxes against my cash flow?
- Yes. They are a cash cost of the business, and a lender deducts them before measuring debt service coverage, even for an LLC or S corporation whose income passes through to the owners.
- Why do so few Tennessee borrowers use SBA 504?
- The figures show 66 504 loans at a median of $1,167,500, a small number for a state with 2,049 7(a) approvals. The data does not say why; property may be going through 7(a), which allows up to 25 years on real estate, or conventional mortgages. It is still worth comparing for any owner-occupied building.
- Is SBA the best route for an established Tennessee company?
- Not always. SBA helps when the deal needs a low injection, a long term or credit for goodwill. A company with strong earnings and collateral may do better with a conventional term loan or an asset-based line, with no SBA guaranty fee.