Despite our strong economy and pro-business atmosphere, many business owners shy away from SBA lending because of some misperception or past experience. Here are some common concerns we often hear:
“I’ve heard there’s too much paperwork and SBA loans take too long to fund?”
The SBA has introduced a simplified application that’s used to access all SBA loan programs. In addition, many community banks are now among the financial institutions recognized as SBA Preferred Lenders, providing expedited in-house approvals. By reducing the amount of paperwork and localizing the approval process, gaining access to SBA guaranteed funds is easier and faster than before.
“Aren’t SBA Loans designed for businesses that can’t qualify for a bank loan?”
Well, yes and no. Yes, SBA loans are designed with more flexible terms so they can appeal to a borrower who, say for example, needs a longer repayment term. But many businesses might fall into a category in which the SBA can support their lending needs. For example, there are SBA programs that support export businesses specifically as well as incentives for businesses that operate in economically disadvantaged areas.
“SBA Loans have too many limitations can restrict how much you can borrow.”
While each program is structured a bit differently, the 7(a) Guaranty Loan Program is the primary and most flexible SBA loan program, providing guarantees on loans up to $5 million for a wide range of purposes, such as:
• Purchase real estate to house the business
• Construction, renovation or leasehold improvements
• Acquisition of furniture, fixtures and equipment
• Acquisition of a business
• Purchase of inventory
• Working capital
“I’ve been turned down for an SBA loan already. Is it worth applying for one now?”
SBA doesn’t loan money itself. Instead they guarantee a certain portion of your loan with a financial institution. While there are many rules and requirements, individual banks have some leeway in the decision making process, and one bank may have stricter requirements than another. Don’t stop with one decline and think an SBA loan isn’t right for you.
Coastal Community Bank | Member FDIC | Equal Housing Lender
