What You Should Know to Obtain SBA Financing More Efficiently

Whether it's what you know or who you know, all we know is that following this guide may get you your SBA loan faster!

When you’re in the market for a business loan, getting access to the funds you need quickly is definitely a priority. If you work with an SBA Preferred Lender, you’ll get your loan processed far faster than working with another lender.

The SBA (U.S. Small Business Administration) knows that business owners want to get their loan applications turned around quickly. That’s why the most active and experienced lenders are given special status to make final credit decisions on SBA-guaranteed loans.

Here’s how it works: SBA Preferred Lenders can get you faster service than non-preferred lenders because they don’t have to submit the loan application to the SBA for approval (which can be time-consuming). Because of their “Preferred” status, they have the authority to approve or reject your loan on the spot.


The Difference Between Preferred SBA Lenders and SBA Express Lenders

Not all lenders offering SBA-guaranteed loans work in the same manner. There are differences in how the loans are processed for approval. The turnaround time for SBA loans will also vary, depending on whether you are dealing with a Preferred SBA Lender or an SBA Express Lender.

Banks or other lenders who are just starting to offer this type of business financing will submit the full loan package to the SBA for review and approval. This procedure will apply to lenders who don’t write a lot of loan business in this category -- for instance, those who specialize in home loans or personal loans.

SBA Preferred Lenders, on the other hand, have shown that they have a thorough knowledge of the SBA’s rules and underwriting policies. These are lenders who have demonstrated through the volume of loans they have serviced they have the experience to make wise credit approval decisions.

An SBA Preferred Lender has the authority to approve loans independently. The lender submits the application to the SBA for an eligibility review only. The turnaround time for this process is usually only about 24 hours.

SBA Express Lenders use their own forms when completing the loan application. The lender uses its own processes to approve loans guaranteed by the SBA. The entire loan application package is submitted to the SBA for approval, but turnaround can be completed in as little as 36 hours.

The Express Program is a quick and easy way for business owners to apply for funding of up to $250,000.00.


Find a Lender You Can Have a Relationship With

As a business owner, it’s wise to find a lender you can establish a long-term relationship with. As you build your business, your financial needs are going to change. More than likely, you’ll be looking for further loans and advice from the lender in the future.

As your business grows, you may want to borrow or refinance larger amounts of money. If a lender isn’t indicating that the bank or trust company wants to be part of your plans, then you aren’t talking to the right lender.

Here are a few ways to ensure you’re working with the right lender.

ASK: DOES YOUR BANKER UNDERSTAND YOUR BUSINESS?

When you’re looking for small business financing, don’t be hesitant about asking about the lender’s experience writing loans for your type of business. In the same way that real estate agents may specialize in certain areas or types of properties, some lenders specialize in working with certain types of business owners.

There’s only so much you can tell someone about your company; for your banker to really understand your financial needs, you may need to show them. Be ready to share your business plan, profit and loss statements, and other documents to give your banker a clearer picture of what you plan to do with the funds you’re requesting.

INVITE YOUR BANKER TO COME TO YOUR BUSINESS

If you feel the best way for your lender to understand how your business works is to see how it operates, ask your bank representative to meet with you on-site. This way, your banker has an opportunity to see you in an environment where you’re comfortable and get a real “feel” for your business and the way it’s being run. This gives them the opportunity to ask pertinent questions that may not be clear from your business plan or the other documents you submitted with your loan application.

OBSERVE: DOES THE LENDER HAVE A “CAN-DO” ATTITUDE?

Since you’re dealing with an experienced lender, you should be dealing with a representative who is approaching your loan application with an attitude that says, “How can we make this loan work for you?”  For example, your bank representative should be familiar with SBA rules making it easier for some franchisees to get SBA loans. SBA approved franchises are entitled to expedited loan processing when a business owner applies for funding.

The SBA 7(a) program is the most popular one among small business owners. If you qualify, you may be eligible for loan guarantees of up to $5 million. You’ll need to have exhausted other sources of funding before you apply for the program.

SBA 7(a) lenders also require borrowers to specify a purpose for the money they wish to borrow. Thanks to the flexibility of this loan program, you can borrow funds to start a business, buy land, equipment, or supplies, and just about any legal business expense imaginable.


If you can keep all of this in mind when you apply for SBA financing, then you’re already one step ahead of the game. If you want an even better shot at success, download our trusty SBA7a Loan checklist below!

SBA7a Loan Checklist