The United States Small Business Administration Has Been in the News Frequently
The United States Small Business Administration has been in the news frequently over the last several years. A shrinking economy and a tough lending environment have put the SBA on the lending radar. It is important to understand fact versus fiction with respect to the SBA. Knowing this can help a business owner when seeking financing.
It takes a long time
A common myth is that SBA loans take forever because they come from a branch of the government. This is simply not true. From start to finish, an SBA loan can take as little as thirty days. Some take longer as a result of information gathering, but generally when all the required information is at hand a borrower is looking at a thirty day turn around.
Paperwork a nightmare
It is understandable that one would think a program that involves the government would require an enormous amount of paperwork. Truth of the matter is that an SBA loan requires essentially the same information any commercial bank loan requires. In fact, by utilizing an SBA loan a borrower can benefit by having a "ready-to-go" package for the bank.
Lenders have no risk
There are two basic types of SBA loans: the SBA 7a loan and the SBA 504 loan. The 504 is most often used for real estate acquisitions, construction, renovation, equipment acquisition and refinance. The 504 offers up to 90 percent financing wherein a bank provides 50 percent, the SBA 40 percent, and the borrower contributes 10 percent. The 7a is mostly used for business acquisition, tenant improvements on leased property and working capital. …