The cleanest natural experiment in small-balance leveraged credit over the last two years didn't happen in multifamily. It happened one asset class over, in the SBA 7(a) file — and it answers the question every sponsor and lender in the $1M–$5M bridge market has been circling since rates stopped falling: does Main Street deal flow survive higher-for-longer, or does it seize?
We now have a public, transaction-level answer. A new analysis of every SBA-backed acquisition of a skilled-trades business — plumbing, HVAC, electrical, roofing — from FY2020 through FY2025 covers 4,370 deals and $4.4 billion in approved loans (Lodestar Research analysis of SBA 7(a) FOIA data, 2026). One disclosure before the numbers: Lodestar Research is published by Lodestar, an M&A advisory founded by Dominick Prevete. We cite it here because it is the best public window into this corner of the credit market — and because what it shows is more encouraging, and more disciplined, than the headlines that treat every elevated coupon as a market-killer.
The finding: a record year at the most expensive money of the era
Buyers didn't wait for cheap money. FY2025 was the biggest year in the file: 1,003 financed acquisitions, $1.08 billion approved, and a median loan of $725,000 — the highest in the series. Acquisition volume is up 73% since FY2020. And that growth ran straight through the steepest repricing in the program's recent history: the average variable rate on these loans climbed from 5.45% in FY2021 to a 10.53% peak in FY2024, then eased to 9.65% in FY2025.
Demand was not rate-blind, and the file doesn't pretend otherwise. When coupons roughly doubled into the FY2022–23 shock, volume fell — by about a fifth. But it paused; it didn't break. FY2024 set a then-record at the most expensive money of the era, and FY2025 beat it with rates still above nine and a half percent.
Two caveats travel with those numbers, and they should travel with every citation of them. A loan amount is a financing proxy, not a purchase price — SBA generally requires an equity injection of roughly 10%, and the loan often funds working capital and closing costs on top of the business itself. And these are loan approvals, which modestly overstate what actually closed. Neither caveat changes the shape of the story; both change how precisely you should quote it.
Why a trades file is a mirror for the $1M–$5M bridge market
The rhymes between this market and ours are structural, not rhetorical. Both are Main Street leveraged markets that top out around $5 million — the 7(a) program by statute (there is not a single deal above $5 million in six years of data), our book by design. The core of the trades market sits between $350,000 and $1.5 million, 46% of all deals. Both markets finance a buyer acquiring a cash-flowing — or stabilize-able — asset with most of the cost borrowed.
And both run on relationships rather than league tables. In the trades file, the top 25 lenders together wrote less than half the deals. One bank — Live Oak, with 581 deals and roughly $705 million, about 13% of the market and twice the share of the number-two lender — leads a long, fragmented tail. Most of these deals still close with a local or regional lender who knows the borrower. Anyone who has placed a $2.5 million bridge loan with a community bank instead of a debt fund will recognize the shape of that market immediately.
Read across, and the finding is the empirical backbone of a view a bridge desk underwrites on instinct: small-balance leveraged demand is rate-sensitive at the margin but far more durable than a doubling of coupons would predict. Deals at 8–9% money are not an anomaly in this segment. They're what this segment does.
The floating-rate tell — and the discipline in it
Here's the part a bridge borrower should sit with. The structure of the trades market barely moved while its price doubled: roughly 87% of FY2025 buyers took variable rates, on terms averaging about 11 years — and that share held across every rate environment in the series. (Lodestar tracks the full rate history on its rates page.)
Floating is a bet on the cut path, and so far the path has underdelivered. These loans price off Prime plus a capped spread, and Prime has retraced only to 6.75% — unchanged since December 2025 — so a borrower who floated at the FY2025 average of 9.65% is paying roughly 9% today. Call it what it is: roughly the same money. The relief that was supposed to arrive has largely stuck.
The macro backdrop says don't count on the rest of it arriving soon. The FOMC held its target range at 3.50%–3.75% on June 17 — its fourth consecutive hold — and the June projections moved the committee's year-end median up, with markets now pricing a possible hike by fall rather than a cut. SOFR sits at 3.53% as of July 9. For a bridge sponsor pricing SOFR-plus, a floating coupon at a 350–450 spread pencils to roughly 7.0%–8.0% today — illustrative math, not a quote. The discipline the trades file teaches is simple: size the plan around the rate that exists, not the one the forward curve promises. That cohort is a six-year demonstration of how long "temporary" can last.
The Northeast under-indexes — and it cuts both ways
The file also says something specific about our home footprint. The Northeast punches well below its weight: New York, New Jersey, and Connecticut together account for about 5.6% of national financed acquisitions against roughly 10% of the U.S. population — half their demographic share. New Jersey shows about 89 deals in six years — roughly 15 a year statewide, averaging $1.05 million, with plumbing and HVAC the center of gravity.
There are two honest readings, and the data supports holding both. Either fewer Northeast businesses are changing hands than demographics imply, or a larger share of Northeast deals are financed conventionally or with seller paper and simply never appear in an SBA dataset. For an operator, thin visible deal flow cuts both ways: less competition for what does transact, and less liquidity when you need an exit. That's the same asymmetry we've written about in the small-balance end of the multifamily market, where a thin lender universe is the defining constraint.
A watch item for value-add underwriters — not an alarm
There's a second-order note here for anyone underwriting renovation budgets, and it should be flagged as a watch, not an alarm. The trades being bought are precisely the ones a value-add sponsor hires — plumbing, HVAC, electrical, roofing. If ownership of those businesses consolidates and professionalizes, the contractor base behind your reno line behaves differently: more reliable scheduling, cleaner paper, and possibly less appetite for cheap cash work.
But the data explicitly does not show a succession wave yet. Acquisition lending's share of all trades 7(a) activity has cycled between 8.1% and 12.1% for six years and sits near its 9.8% average — what's record here is absolute volume, not acquisitions taking a growing slice of the market. And as the state numbers above show, the financed-acquisition channel is especially thin in the Northeast. So treat contractor consolidation as a leading indicator to track in your renovation pricing, not a cost shock to underwrite today.
The takeaway
One clear conclusion comes out of 4,370 transactions: the rate shock repriced small-balance leverage; it didn't end it. Underwrite to that — durable demand, rate sensitivity at the margin rather than the core, and floating exposure that only pays off if the cuts actually come.
That's the environment we lend into every week: $1M–$5M bridge and value-add multifamily in Northeast and Southeast secondary markets, priced to the rate environment that exists — not the one the curve keeps promising. If you're carrying a deal that needs to pencil at today's money, that's the conversation to have now.
FAQ
Does SBA small-business lending data really tell us anything about multifamily bridge financing? It's an adjacent Main Street leveraged market — sub-$5M deals, non-institutional buyers financing most of the cost of a cash-flowing asset through local and regional lenders. The value isn't the asset class; it's the behavioral read-across on how small-balance leverage responds to a rate shock.
How much did the cost of this acquisition debt actually rise? Average variable rates on these loans went from 5.45% in FY2021 to a 10.53% peak in FY2024, easing to 9.65% in FY2025 (Lodestar Research analysis of SBA 7(a) FOIA data, 2026). Volume grew 73% across the same span.
Most of these borrowers floated — has that bet paid off? Not much yet. Prime has retraced only to 6.75%, so a borrower who floated near 9.65% in FY2025 is paying roughly the same today. Floating is a wager on the cut path, and the path has underdelivered.
Is a retirement-driven “silver tsunami” of trades-business sales here? Not as a regime change. Acquisition share of trades 7(a) lending has cycled between about 8% and 12% for six years and sits near its ~9.8% average; the record is one of absolute volume, not of acquisitions taking a growing slice (Lodestar Research).
Loans are for business purposes only and are not subject to TILA, RESPA, or HOEPA. Not for primary residences. Equal Housing Opportunity. All loans subject to underwriting approval. Rates and terms shown for illustration; actual rates depend on deal specifics. We do not lend to borrowers with credit below 600 or on owner-occupied properties.