SBA Loan | How To Apply for SBA Loan

0
383

SBA Loan | How To Apply for SBA Loan

SBA Loan could easily be gotten and Aapproved only if you understand how the Loan application is being done. The SBA Loan is commercial lending institution that the SBA guarantees as much as 80 percent of the loan principal for .

Like Us & Follow Us on the Following Social: @twitter Facebook & Google +

Join PGUpdates on Telegram Here

Many people buy SBA ready business plans and they are not even sure how the process works. This article sheds some light on what SBA loans are, how they work and the steps in getting the loan.SBA Loan | How To Apply for SBA Loan

 

 

What is an SBA loan?

 

The SBA loans are term loans from a commercial lending institution or bank of up to 10 years, with the Small Business Administration (SBA) guaranteeing as much as eighty percent of the loan principal.

 

Who are SBA loans for?

 

Who are SBA Loans for? SBA loans are for established small businesses capable of repaying a loan from cash flow, but whose principals may be looking for a longer term to reduce payments or may have inadequate corporate or personal assets to collateralize the loan.

 

How many loans are available?

Vast. The Small Business Administration guarantees some $12 billion per year in loans.

 

Best Use of Loans:

Purchasing equipment, financing the purchase of a business and in certain instances, working capital. The Small Business Administration help borrowers overcome the problems of loan application associated with limited operating history or inadequate collateral.

What are the fees or cost?

Comparatively inexpensive when looking at other loan sources. Maximum allowed interest rates range from highs of prime plus 6.5 percentage points to prime plus 2.75 percentage points, though lenders can and often do charge less. These rates may be higher or lower than rates on non-guaranteed loans. What’s more, banks making SBA loans cannot charge “commitment fees” for agreeing to make a loan, or prepayment fees on loans under 15 year (a prepayment penalty kicks in for longer loans), which means the effective rates for these loans may be, in some instances, superior to those for conventional loans.

These rates may be higher or lower than rates on non-guaranteed loans. What’s more, banks making SBA loans cannot charge “commitment fees” for agreeing to make a loan, or prepayment fees on loans under 15 year (a prepayment penalty kicks in for longer loans), which means the effective rates for these loans may be, in some instances, superior to those for conventional loans.

 

Ease of Acquisition:

Challenging. Although The Small Business Administration has created streamlined approaches to loan applications, conventional SBA guarantee procedures and protocols pose a significant documentation and administrative challenge for most borrowers.

 

The range of Funds Typically Available:

The Small Business Administration guarantees up to $1 million of loan principal.

 

Steps in Getting an SBA Loan

While most banks, as well as select commercial finance companies, offer SBA loans, there are two specialized categories worth knowing about.

These are Certified Lenders and Preferred Lenders, both of which have entered into contractual agreement with the SBA and officially participate in the Preferred Lender/Certified Lender programs (PLP/CLP).

More Clear Details about this Lendets

These lender programs were designed to provide better response to borrowers; they accomplish this goal by placing additional responsibilities on the lenders for analysis, structuring, approval, servicing, and liquidation of loans, within The Small Business Administration’s guidelines.

About 850 lenders qualify for the SBA’s Certified Lender Program, having met certain criteria, the most important of which, from the borrower’s perspective, is extensive experience in SBA loan-guarantee processing.

Certified lenders account for about 4 percent of all SBA business-loan guarantees. Since the certified bank does much of the SBA’s work, the agency offers turnaround times of three business days for processing the application.

 

Approximately 450 lenders meet preferred lender standards. This group processes approximately 21 percent of loans. Preferred lenders have the full lending authority and as a result, can offer a one-day turnaround on completed loan applications.

 

If you are seeking a loan, your best bet is to work with a certified or preferred lender. The SBA-guarantee process is tricky at best, and you want a lender who has been through it more than once

 

These lender programs were designed to provide better response to borrowers; they accomplish this goal by placing additional responsibilities on the lenders for analysis, structuring, approval, servicing, and liquidation of loans, within The Small Business Administration’s guidelines.

About 850 lenders qualify for the SBA’s Certified Lender Program, having met certain criteria, the most important of which, from the borrower’s perspective, is extensive experience in SBA loan-guarantee processing. Certified lenders account for about 4 percent of all SBA business-loan guarantees.

Since the certified bank does much of the SBA’s work, the agency offers turnaround times of three business days for processing the application.

 

 

 

Your comment About this PGupdates Article Matter to Us: