From his downtown office, Erik Daniels leads one of the nation’s top SBA lending programs.
As U.S. Bank’s head of SBA lending, Daniels has a special emphasis on small business in Los Angeles – like the butcher shop and grocery store his grandfather started on the city’s east side during the Great Depression.
Under Daniels’ leadership, the Minneapolis-based bank issued 258 7(a) loans in L.A. last year, among the most out of all other lenders, totaling more than $82.4 million.
In an interview with the Business Journal, the local executive broke down trends and policies shaping the SBA lending landscape today.
The SBA reported a record year for lending volume in 2025. Does that match what you’re seeing on the ground with L.A. small businesses?
We continue to see business demand. I think business-owners remain resilient in L.A. We have a particular emphasis and we’re seeing success in real estate acquisitions, ownership transitions and debt refinancing. Our customers continue to adapt to this higher sustained rate and higher cost environment, and this is really where the SBA plays a critical role in enabling these types of transactions.
We look at the program as a way to offer longer amortizations, longer terms, which is going to lower the payment for customers and enable higher cash flow and lower equity requirements, meaning the customer gets to retain their capital. Even amidst economic uncertainty, we’re still seeing demand from these business-owners who are focused on growth, long-term stability and transitions, especially as we see these changes-of-ownership and retirements as part of the “silver tsunami” (the demographic shift from the baby boomer generation). We’re seeing the SBA program serve as a significant way to enable these transfers and sustain the economies, maintain the jobs.
Which industries contributed the most to the record lending totals? Is the manufacturing industry representing a growing share of your SBA lending?
In our bank, we have had a continued effort in enabling access to capital and banking services to manufacturers. I believe around 3.9 to 4% of small businesses are manufacturers, and we continue to finance manufacturers to help them again with their money movement. We have an initiative to outreach to manufacturers.
We don’t really have any concentration per se, and we have as wide a variance of helping a manufacturer expand their facilities and buy or expand a property. We financed a customer who bought a FedEx route. These are independent businesses, and they have these routes. They have a financing value, or economic value, and we use SBA lending to help them acquire these types of businesses.
In Los Angeles, the economy is very diverse and very robust, and we want to make sure that we’re prepared with our products and services to be able to serve as many (kinds of businesses) as we can.
How does application volume compare to approvals?
Directionally, there really hasn’t been much change. We are seeing, very recently, an increase in demand. If I were to double click that and look into where it’s coming from, it’s pretty broad-based: customers continuing to come to us to help them refinance. We have a number of projects for just straight real estate purchase, oftentimes with construction, to help them expand facilities or conform it to their business.
We have a program within SBA 7(a) called SBA Express, which we leverage as a line of credit program for our customers. We’re seeing a number of those. We might help a customer get a term loan, buy a business or facility and then a lot of credit behind that to help them with their short-term working capital, and then along with that, help them with their deposits.
Are you seeing more demand for smaller or bigger loans?
Our SBA Express program would be lower dollar value – normally, to buy a piece of equipment or a cash flow manager, or a line of credit. We could finance a $500,000 piece of equipment. We could finance a $2 million change of ownership, and we could finance a $20 million building purchase with a 504 loan.
Average dollar sizes have remained constant – but a little higher, slight increase in average transaction size for us, but we continue to see a robust demand in the small and large loans. (The bank’s average 7(a) loan so far this year was roughly $264,000 nationally, up 5% from 2025’s whole-year average).
Has the recent reinstatement of fees impacted your lending?
We haven’t seen an impact from fees for lenders and for small-business-owners. Very few, if any, programs would offer full maturity loans for 10 to 25 years. Ten-years are usually going to be non-real estate loans, and real estate loans can go up to 25 years. We have the opportunity to finance the fees as well, to reduce the output for the fees, but we haven’t seen that.
California is home to many immigrant-owned businesses. How has the SBA rule change barring non-citizen entrepreneurs from loans affected your clients or pipeline?
We carefully monitor all rules and regulations, and we work closely with our clients to prepare them for any changes. We’ve been through lots of different changes, and we adjust and adapt. Whether it’s the emphasis on manufacturing – there’s a lending credit program that has been enacted called the Working Capital Program. There’s the change with regards to non-citizen recipients of SBA loans. We were able to, during that period, help our customers who would have been impacted before the change took place, and then we just continue to work with our customers in terms of overall demand and pipelines. We actually are continuing to grow right now.
In what ways were you working with non-citizen customers who were impacted by the eligibility change?
We identified who would be impacted when the change took place, and then we worked closely with them to make sure that we were able to gather everything that we needed to clear all conditions in order to get their SBA loan number. We had about a window of about a month, a little bit less than a month, and subsequent to that, we haven’t received many inquiries with regards to this.
For very small businesses or first-time borrowers, what are some hurdles to getting an SBA loan today?
A lot of business owners come through friends and family and lines of credit and credit cards and so forth. But when they come for an SBA transaction, we want to make sure that they’re prepared. I would say, have a thoughtful plan. A bank is going to be your partner.
Business-owners are not only extraordinarily resilient; they’re very highly adaptable, and oftentimes, we want to make sure that they completely understand processes and procedures, and then we work with them to make sure that we help shepherd them through that process. If they’re first-time borrowers, they may not be as conversant with the borrowing process. Continuing to work closely with them, providing the information that’s requested is usually going to give them the best opportunity for success.
What is the balance between businesses coming to you for real estate financing and those looking for working capital or operational needs? Has that ratio changed in the last year or so?
Each customer has a unique set of circumstances. Some of them are in a growth and expansion mode, and I would say that’s predominant to what we’re trying to achieve. For the transfer of ownership, a new borrower or a new owner is coming in, and we want to make sure that those jobs are retained in the community.
For refinances, customers may come in with a higher cost of capital, shorter terms, and it’s impairing their cash flow. We had a transaction where we refinanced debt and saved upwards of $9,000 a month, and that’s huge for a small business, because then they could, instead of paying interest or carrying that debt, hire another employee, buy a piece of equipment, buy more inventory.
The SBA lending program is predominantly a cash flow program, so we want to help them with cash flow, which is why we leverage the guarantee of these transitions. They’re not always real estate secured. Whether it’s that or whether it’s simply helping improve their cash flow, it’s all with the intent of helping them continue to grow.
