The SBA (Small Business Administration) plays a major role in commercial financing. However, there is technically no SBA loan product. Business financing commonly called SBA loans is a misnomer. Yet, the SBA plays a primary role in offering financial help to small businesses.
Except for their “Microloan” program (smaller direct lending amounts), the SBA does NOT loan money directly to businesses. However, small business owners wanting SBA loans to get their startup venture off the ground or expand their existing company typically look to the SBA to help. For over 50 years, the SBA has been there for small businesses throughout the U.S.
An SBA loan is actually a bank or credit union loan that has the backing and guarantee of the SBA. Their typical role works in the following way. A business owner asks a bank or credit union to loan money to their company. The lending institution replies that the business is not strong enough to meet their criteria (the most common answer).
Either the business owner asks or the lender offers to package the financing request for SBA loan approval, which, if granted, means the lender receives an SBA guarantee (up to 90 percent of the loan amount) and is able to approve the financing. In past years, this plan was often greeted with dismay by business owners, as the SBA had to totally process and underwrite the loan from the beginning, without the benefit of modern technology.
In the past three decades, however, the SBA’s role has expanded and they offer streamlined, timely answers to lenders and borrowers. SBA loan guarantee programs have become the prime source of small business financing in the U.S. Their approval guidelines are clear and place much weight on the recommendations of participating lenders.
Business owners needing financing and considering SBA loans should always stay up-to-date on current procedures. As a federal government agency, the SBA can be subject to policy and procedure changes emanating from the White House or Congress as public fiscal policy evolves.
Consider letting UnsecuredBizLoan help you, as their professionals remain vigilant and up-to-date on all rules, limitations and benefits of SBA loans. You will gain a valuable partner in financing your business to help you reach all of your goals and objectives.
To apply for funding for your small business, use the form on the right to begin the application process.