Guide Financing Options SBA
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SBA - Small Business Administration Federal appropriations are available to the SBA to provide guarantees on loans structured under the agency's requirements. With a loan guaranty, the actual funds are provided by independent lenders who receive the full faith and credit backing of the federal government on a portion of the loan they make to a small business. The loan guaranty that SBA provides transfers the risk of borrower non-payment, up to the amount of the guaranty, from the lender to SBA. Therefore, when a business applies for an SBA loan, they are actually applying for a commercial loan, structured according to SBA requirements, which receives an SBA guaranty. It is a good idea to check your personal credit situation. Too often, entrepreneurs think that their business credit and personal credit are separate. A business’s credit is built upon the owner’s personal credit. If you have not established a business credit history, lenders and suppliers will use your personal credit history to determine your terms of credit. Your credit report determines how potential lenders and suppliers will perceive you. You should know what appears on your credit report, because you may find errors that you will want to have corrected. To get a copy of your credit report, contact one of the three major credit bureaus. When applying for a loan, you must prepare a written loan proposal. Make your best presentation in the initial loan proposal and application; you may not get a second opportunity. The loan proposal is also known as a business plan. Small Business Lenders Almost all national banks are SBA-certified lenders. You should call the local branch in your area and speak with the commercial loan officer; if the officer can’t assist you, he or she will direct you to someone who can. In deciding to provide the loan guaranty, the SBA will take into account whether the borrower is a minority. However, borrowers must generally meet a very high threshold before they get an SBA loan guaranty, and it can take a very long time. The most common reason for delay is the applicant’s failure to provide all the relevant information. It may be worthwhile to hire a consultant to help you through the process in order to obtain a timely answer from the SBA. |