Choosing an SBA Lender
An SBA loan is a great option for small business transactions. This includes buying a company or growing a company. With so many SBA lenders it may be difficult to choose an SBA lender. The below guide can help you determine an SBA lender that is a good fit for your business needs. For more information see Finding an SBA Lender.
Why an SBA Loan?
First, why should you seek an SBA loan or SBA financing? An SBA loan is a great source of financing for many small businesses. This is due primarily to their competitive terms. Most SBA loans have low-interest rates, high borrowing amounts, and generous repayment terms.
For a lender, one of the key benefits to SBA lending is that the SBA guarantees a portion of the loan usually 85%. This lowers the risk for SBA lenders and as a result, they can loan more generously.
The downside of seeking SBA lending is that the documentation can be extensive. SBA loans are competitive and can take a significant amount of time to secure the funding. Most SBA loans take between 60-90 days to close. However, for individuals and small businesses willing to invest the time and effort the benefits are worth it.
Peak Business Valuation, business appraiser, provides SBA business valuations for SBA lenders across the country. We are happy to connect you with an SBA lender to meet your needs. Schedule a free consultation today!
Preferred Lender vs Non-preferred Lender
The next thing to consider when choosing an SBA lender is whether to work worth a preferred vs non-preferred SBA lender. There are many benefits to using an SBA lender who is a Preferred Lending Partner. Below are a few of the advantages of working with an SBA preferred lending partner.
Preferred lending partners can help borrowers obtain funding faster than a common SBA lender. Due to their preferred lending status, they can approve SBA loan applications before submitting them to the SBA. Approving the loan directly can save you valuable time in the SBA loan process. They also underwrite the SBA loan internally and make the final credit decision. Whereas a non-preferred lender sends the SBA loan application to the SBA for approval. This approval can take up to four weeks.
Since the preferred lender is doing the underwriting, oftentimes they require less documentation than the SBA will ask for. A non-preferred SBA lender may require more documentation as they send everything to the SBA to get approval.
Last, preferred lenders earn this status due to their reliability. They have a proven track record of successfully processing, closing, and servicing SBA guaranteed loans. These lenders also receive this status because of their performance, loan volume, and knowledge of SBA policies and procedures.
Experience of SBA Lender
Next, you will want to consider the experience of the SBA lender. How many SBA loans does the lender typically approve? What should you expect during the loan process? An experienced lender will be able to easily address your questions and more efficiently help you through the application process.
Each lender will have experience with specific industries. Be sure to ask what industries the lender commonly works with as they will be able to offer more knowledge and help to those industries. Some lenders have a specific list of target industries/sectors that they will only lend to.
For a list of the most active SBA 7(a) lenders, refer to the SBA’s 100 most active SBA 7(a) lender list.
Variety of SBA Loan Options
SBA lenders can offer a variety of SBA loan options. This helps them better assist business owners and the variety of financial needs. An SBA lender will ask questions to help you find the best solution for your business. They can then identify which loans you qualify for, and which options will help achieve your financial goals.
Some of the most common types of SBA financing include SBA 7(a) loans, SBA CDC/504 loans, and SBA microloans. The SBA 7(a) loan is the most common SBA loan. This loan is up to $5 million for almost any purpose. This can include equipment, real estate, working capital, startup costs, and debt refinancing.
Peak Business Valuation provides SBA business valuations for SBA 7(a) loans. As such we have connections with dozens of SBA lenders across the country who provide 7(a) loans. We are happy to connect with you a lender(s) who services your industry and/or business need. Schedule a free consultation today to get started!
Location and Availability of SBA Lender
The next consideration is the location and availability of the SBA lender. Some individuals choose to work with a local SBA lender. Often local lenders understand the importance of small businesses to their community. As such, they invest more time in the success of their clients. A local lender can also provide quick answers to questions. And documentation may be easier to deliver in-person rather than through a secure dropbox online.
However, for other small businesses, an online SBA lender is a better option. Most are available at a variety of times of day rather than standard business hours like a local lender will have. Online SBA lenders can also have a nationwide range of financing ability whereas a local lender may be limited to a geographic area.
Focused on your Goals
Find an SBA lender who is focused on your goals. The SBA lender should ask enough questions to find a solution that meets you and your business’s financial needs and goals. Finding the right funding option is key to successfully obtaining SBA financing. An excellent SBA lender will stay focused on your goals and go the extra mile for your business needs.
The application process for SBA financing can be extensive, but with the right SBA lender can be easier than anticipated. A quality lender will help you understand the forms, complete them correctly, and assist in approving them. Also, consider whether the application process is online or is solely in person. Each lender will conduct their application process differently.
Additional Resources of SBA Lender
Many SBA lenders offer additional resources to help small businesses. This can include business consulting, spending trackers, among other business tools. These tools and resources can be invaluable as you continue to grow your business.
Choosing a quality SBA lender is key to successfully obtaining SBA financing. Your SBA lender will be your guide through the application process and provide you will all the information needed to obtain the needed financing. Each business and its needs are different. As such every business seeking SBA financing needs a lender dedicated to helping the business achieve its financial goals.
Peak Business Valuation provides SBA business valuations for SBA lenders across the country. Our broad network of connections can help you find and choose the right SBA lender to meet your business needs. We are happy to answer any questions you have about seeking SBA financing. We are also happy to point you in the right direction of an SBA lender. Give us a call today or schedule a free consultation using the link below.
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