Two Expectations For SBA Loans

When most business owners hear a lender propose an “SBA” guaranteed loan they cringe at the paper work and lengthy process. Although these loans have been cumbersome in the past, they have certainly come a long way in improving the process for the lender and borrower. Government guaranteed loans have more “red tape” to work through to qualify than traditional loans; however, the guarantee will help a lender make a loan that otherwise would be declined. Two expectations that need to be set are closing costs and the time frame of the process.

Closing costs are typically higher with an SBA loan. Currently the government has issued stimulus money to waive the “guarantee fee” charged by the government to issue the loan. (Fees will still be charged by the lender.) This money is available on a first come first served basis. If you plan to get an SBA loan make sure you start the process early enough that you can take advantage of the stimulus. It could save you thousands of dollars.

SBA loans take 45 days at best to process (count on 60 days). The time could be longer depending on your responsiveness to the lenders requests in submitting a completed loan package. The process will be much easier if you select a lender who is familiar with the SBA program and has issued several loans within the program. Your banker will make or break this process for you.

With the right expectations and a lender who knows the SBA program, your experience in acquiring an SBA loan will be favorable. Make sure you shop your lender and your banker to make sure you put together the best team to handle your loan request. Remember that the SBA guarantee is worth the hassle when it comes to getting the loan you need to keep your business moving forward. Be patient and proactive in working through it.

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