The role of the SBA (Small Business Administration) in financing and helping small businesses succeed can be a bit confusing to the layperson. An SBA loan in many ways is an oxymoron, as the SBA does not directly loan funds to businesses. However SBA loans play a critical role in small business financing. In addition, the SBA also offers many additional services to business owners.
Working with third-party lenders, SBA offers loan guarantees, up to 90 percent of loan balances. Your local bank, credit union or another SBA-approved lender, the SBA guarantee encourages approved organizations to make small business loans. An SBA loan is really financing from a lender using SBA guidelines.
Borrowers meeting those guidelines and lenders properly packaging loan applications often gain approvals for SBA loans. Lender matching services, like UnsecuredBizLoan.com, often facilitate the process, using their experience and knowledge of the SBA loan process.
Bank lenders often reject small business financing requests, as many of these applicants do not have the assets, income, credit and operating history that meets commercial loan guidelines. However, SBA loan guidelines are tailored to fulfilling their objective of helping small businesses succeed.
As a guarantor, instead of a direct lender, SBA’s role expands, allowing them to help more businesses than if they were making direct loans, which would consume their available funds. SBA loans, made by approved lenders with their funds, only affect government dollars in the event of loan default by the borrower.
SBA guidelines involve securing sufficient borrower collateral to minimize their cash infusion responsibilities in the event of defaults of SBA loans. As with all loans, a guarantor is not responsible for monthly payments, as is a co-maker. Guarantors only become responsible when a loan is in default, not just delinquent.
SBA’s role, as guarantor, enables banks and other approved lenders make business loans, otherwise unavailable to small companies. This role works for bank lenders, the SBA and, most importantly, for small business owners. Let UnsecuredBizLoan.com help your business get the financing you need to help your business achieve success.
To apply for funding for your small business, use the form on the right to begin the application process.