BayFirst Financial Closes $95 million SBA Loan Sale to Banesco USA
BayFirst Financial, a Tampa-St. Petersburg-based bank, successfully closed a $95 million Small Business Administration (SBA) loan sale to Miami-based Banesco USA. This move comes amid a year of turbulence for the SBA, which saw a fee hike, a spike in problem loans, and a 43-day government shutdown. Yet, despite these challenges, the SBA continues to lure banks, proving its enduring appeal.
Banesco USA’s Entry into SBA Lending
After studying the business for three years, Banesco USA recently dove into SBA lending with its $95 million acquisition of SBA 7(a) loans from BayFirst Financial. Under the agreement, Banesco also took over the servicing of a $1.5 billion portfolio of third-party 7(a) loans from BayFirst. In addition, Banesco has hired BayFirst’s SBA lending team as part of its ambitious foray into SBA loans. Details of the acquisition were announced earlier this week.
Banesco USA’s Plan for SBA Lending
Banesco USA’s CEO, Calixto Garcia-Velez, expressed optimism about the bank’s new venture, expecting to meet or exceed BayFirst’s SBA origination levels, which were close to $500 million annually before credit quality issues arose. Banesco, unlike BayFirst, intends to focus on larger-dollar deals, while BayFirst focused on loans of $150,000 or less. The Miami-based bank is also planning to leverage its robust digital banking platform to become the primary financial institution for SBA borrowers.
Recent Trends in SBA Lending
The SBA’s 7(a) loan program, which started in 1953, has guaranteed approximately $120 billion of small business loans since October 2022. The program provides guarantees ranging from 50% to 85% on loans up to $5 million and has attracted several banks this year, including Banesco USA and Atlantic Union Bankshares in Richmond, Virginia. Other recent SBA deals include the acquisition of First Savings Financial Group by First Merchants Corp. and the acquisition of SBA lender Integrated Financial by Capital Bancorp.
Challenges Facing the SBA
Despite its popularity, the SBA has faced numerous challenges. In March, due to a deteriorating fiscal position, the SBA announced it would eliminate a series of fee waivers and discounts implemented during the Biden Administration to incentivize small-dollar lending in its flagship 7(a) loan guarantee program. This move was followed by a surge in loan defaults and a government shutdown that lasted through October and into November. Despite these issues, 7(a) lending volume remained strong, with originations totaling $37.3 billion for the 12 months ending September 30, 2025.
The Way Forward for BayFirst and Banesco
After exiting the SBA business due to a spike in problem loans, BayFirst has shifted to a traditional relationship-banking strategy focused on its local footprint. Meanwhile, Banesco is quickly implementing its plans to expand its small business lending capabilities. The bank recently hired veteran SBA lender Elijiah Gray to oversee its operation and aims to complete a second loan sale, totaling $4.5 billion, to Banesco before year-end.
As we continue to monitor these developments, it’s clear that despite a challenging year, the SBA’s popularity with lenders endures, offering promising opportunities for small and medium-sized businesses across the country.
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