Using a SBA Preferred Lender for Your Small Business Loan

When it comes to qualifying for Small Business Administration (SBA) loans, the standards are actually more flexible compared to other types, yet lenders continue to demand extensive time and documentation in order to review an SBA-backed loan request.

When choosing a preferred lender, business owners should choose a preferred lender that specializes in the particular type of business they’re running; indeed, by choosing a lender that specializes in genre-specific loans, a business can greatly improve its chances of getting approved.

The following are some basics concerning SBA lenders and loans.

Defining SBA Loans

These are loans executed by financial institutions to businesses that are structured according to the aforementioned U.S. Small Business Administration guidelines and requirements and are guaranteed by the SBA in terms of repayment efforts. The SBA works with lenders to provide loans to small businesses, though the agency doesn’t lend money directly to the owners of these businesses; rather, the also-aforementioned guidelines are set for loans made by everything from community development organizations and micro-lending institutions to partnering lenders.

Making it easier than ever for small businesses to secure a loan is the SBA’s tendency to reduce the risk for lenders while providing a simple portal in which to access capital.

The Benefits of SBA Loans

In short, SBA loans could make it significantly easier for businesses to qualify for financing. Additionally, such loans could aid in businesses receiving more flexible terms as compared to typical business loans, with up to 90-percent financing, terms up to 25 years and other flexible income and collateral considerations.

To summarize, the primary benefits of a small business working with an SBA preferred lender to secure an SBA loan includes:

  • Competitive Terms SBA-sanctioned loans generally bring rates and fees that are comparable to non-guaranteed variants.
  • Counseling and Education Select loans are enhanced by way of continued support to help novice business owners start and run their operations.
  • Unique Benefits These run the gamut from flexible overhead requirements and lower down payments to no collateral needed for some loans.

What Makes SBA Loans So Appealing to Small Businesses in Particular?

At every stage of running a business, owners of such ventures understand that they will eventually need additional capital to help them succeed. It is a fairly common scenario to witness a new business launch get off the ground by way of personal savings or through loans from, say, more financially fortunate family members. But once those wells run dry, the vast majority of small business owners find themselves turning to business financing institutions of a more formal manner to make up for gaps in payroll, take advantage of bulk deals, renovate their space or expand to new locations – and this is just scratching the surface of what they will need. The sad truth is that not every loan granted to small businesses in such situations is drafted with the borrowers’ best interest in mind.

That’s precisely where the SBA comes in.

Indeed, it is easy to assume that most business owners would prefer not to deal with what is sometimes looked at as the “bureaucracy” of the federal government when seeking out funds for their venture, but the appeal of SBA loans is often too attractive to ignore. As such, an SBA loan is a small business owner’s pass to the type of business loan typically reserved for large, well-established companies.

The following four reasons summarize why small business owners should explore their eligibility for an SBA loan if they haven’t already:

  • The SBA makes bank loans possible
  • There are SBA loans for every business, at every stage
  • There are SBA loans for businesses with every need
  • The SBA has an interest in seeing borrowers ultimately succeed