SBA loans
- Thread starter Inky29
- Start date
I was just approved on a loan for a small business. We avoided SBA and went with a conventional loan. Everything we were told was SBA could be a pain and should be used as a last resort. We talked to several banks about it. One thing that concerned us about the SBA was fees and closing. If you ever wanted to change terms you had to go back through that process. Using a local banker appealed more to us also.
I would say that the up front process for SBA loans is generally going to be more arduous in terms of paperwork than with conventional bank financing. Generally, the only reason someone would go through the SBA process would be that they couldn't get the financing they sought otherwise. In some instances you might be able to get a better rate or structure with the SBA, so that might be a consideration.
Generally, once you've gotten the loan, there isn't too much of a hassle difference, although it may be that some banks might do NON-SBA financing with less reporting requirements.
Whether you choose SBA or not, you will be dealing with a local banker, unless no banks in your locale offer SBA guaranteed loans. I believe the BIA also has loan programs, but I'm not familiar with how they work.
Generally, once you've gotten the loan, there isn't too much of a hassle difference, although it may be that some banks might do NON-SBA financing with less reporting requirements.
Whether you choose SBA or not, you will be dealing with a local banker, unless no banks in your locale offer SBA guaranteed loans. I believe the BIA also has loan programs, but I'm not familiar with how they work.
It may not be the best loan for you, but you should view the SBA loan programs as a priority option. Sadly, there's a lot of misinformation out there and almost all of it is perpetuated by lenders that don't know what they are talking about.
SBA loan programs are developed for lenders, not borrowers. It's the lender that has the relationship with the SBA, not you. This is important to keep in mind when a banker gives you information like what's being repeated in this thread. It's probably not accurate when it pertains to YOU having to do something extra.
The main advantage of an SBA loan is that the underwriting criteria is based on repayment ability, not collateral because the SBA guarantees a percentage of the loan. Not having to over-collateralize your loan with everything you own is a good reason for any small business looking for capital to make it your first consideration.
Any extra work for the loan is the lenders' responsibility. It's part of the program and the relationship between the lender and the SBA in consideration for the guaranteed portion of the loan which they get to turn around and loan to someone else. Conveying this as a reason the borrower wouldn't want an SBA loan asinine. It's got nothing to do with you. Go ahead and translate it into them wanting to do what's easy for them instead of what's best for you.
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SBA loans are prohibited from charging separate origination/closing fees. They can charge a packaging fee but it has to be the same or lower in cost than what they charge in the normal commercial loans of similar size.
SBA loan programs are developed for lenders, not borrowers. It's the lender that has the relationship with the SBA, not you. This is important to keep in mind when a banker gives you information like what's being repeated in this thread. It's probably not accurate when it pertains to YOU having to do something extra.
The main advantage of an SBA loan is that the underwriting criteria is based on repayment ability, not collateral because the SBA guarantees a percentage of the loan. Not having to over-collateralize your loan with everything you own is a good reason for any small business looking for capital to make it your first consideration.
Any extra work for the loan is the lenders' responsibility. It's part of the program and the relationship between the lender and the SBA in consideration for the guaranteed portion of the loan which they get to turn around and loan to someone else. Conveying this as a reason the borrower wouldn't want an SBA loan asinine. It's got nothing to do with you. Go ahead and translate it into them wanting to do what's easy for them instead of what's best for you.
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SBA loans are prohibited from charging separate origination/closing fees. They can charge a packaging fee but it has to be the same or lower in cost than what they charge in the normal commercial loans of similar size.
A little late to the party here, but I am an SBA lender for the number 1 SBA lender in America. I'm more than happy to answer any questions if you still have some.
