SBA Lending – Is it really that difficult to get a loan?

Over the years, SBA lending has undergone an amazing transformation.  Fortunately, the current structure makes it far simpler for a small business to apply for and receive assistance under the various SBA programs.

One of the biggest improvements is the creation of the SBA Business Development Officer (BDO) position in many of the community and national banking institutions.  Creating this commercial sub-set lender position allows for a separation between standard commercial lending projects and those projects better handled by a trained SBA specialist who knows the products inside out.

While SBA lending is not necessary for many, or even eligible for some, those that are eligible are able to take advantage of, and benefit from, the lower cash injection, longer loan amortization, lessened collateral requirements and overall improved cash flow resulting from using the SBA product versus standard commercial loans.

The loan application process for an SBA loan is virtually the same as the conventional commercial process.  Financial records and statements, business plan narratives, projections and other reasonably standard documents will always be required regardless of lender or loan product. These generic items are used to determine the creditworthiness of an applicant and help assess the risk associated with determining the probability of repayment.

The time it takes to process an SBA loan, a question I am always asked, is determined by a number of items.  If there is real estate involved, we must have a commercial appraisal and environmental study.  The borrower must provide historical and projected financial documentation. Most importantly, however, the borrower and his SBA lender must work together to gather the required documentation so that the loan request package can be presented to the approving authorities in a timely manner.

It is important to note that an SBA “Preferred Lender” (PLP) bank has been fully vetted by the government and has been awarded the right to approve, close and fund a loan in a time frame that equals that of a conventional loan.

The impact of working with an experienced SBA lender cannot be overstated.  A trained SBA BDO will serve as your quarterback as you navigate the structure of the deal, help create a sensible use of proceeds which will accomplish your needs and, most importantly, be able to help you understand the process while you move from step to step.

While there certainly are demands for documents, a good SBA lender will guide the process and make it as painless as possible as you work together to achieve your goals.

 

About the author:

Paul Pickhardt is the SBA Manufacturing Lending Manager at United Community Bank. He and his wife have lived in the Greenville area for nearly 15 years and have two adult children. Pickhardt has been involved with many community organizations, including the Greenville Area Chamber of Commerce, Upstate SCORE and the Small Business Development Center (SBDC). Pickhardt is also a Vietnam Veteran who honorably served his country as a Captain in the U.S. Army.