There are a number of frequently asked questions that we receive. We’re going to address some of those questions.
Now many people ask us why they wouldn’t just automatically get a loan if the SBA iis guaranteeing it.
What happens is the SBA gives lenders what’s called preferred lender status as long as the lender makes good loans that get repaid.
Do they get to keep their preferred lender status?
They like this status because it allows them to approve the loan on their own without having to go through the SBA.
If they lose this status than they have to run every loan request through the SBA, which greatly delays the process. So lenders want to ensure first and foremost that you as the business owner is going to repay the loan. The SBA guarantee mitigates the lenders risk but doesn’t motivate them to make a loan to just anyone. They want to be confident that the borrower is gonna pay it back.
Folks always want to know how long it will take them to get an SBA loan. This is in part driven by how quickly you get everything back to your lender. If you are responsive and provide all the information and documentation that is requested of you, then you can expect about a two month process. That being said, many loans get delayed due to lease negotiations.
We often see loans take longer than two months. But best case scenario it can happen in a couple of months. Clients sometimes ask us that they can use a co-signer to help them get an SBA loan. You can use a co signer under certain loan programs.
Co signers will need to have strong credit and outside income that shows the capacity just service the loan payments along with their personal expenses. A co signer can also pledge their personal assets like a house to secure your loan but co-signers can’t be used for all loan programs.
There are a number of documents you will need to submit when you apply for a loan.
You need to provide the last three years of your federal, personal and business tax returns, the last three years of your financial statements, which would include a profit and loss statement and a balance sheet, you’ll need to provide an interim financial statement and complete all the loan forms that are given to you.
For start up businesses, You’ll need to submit your business plan and projections.
Many people ask us about grants. We don’t offer any grants and most for profit. Businesses don’t receive grants. If you’re a for profit business and need money to start your business debt financing is much more likely than finding a grant.
If you are moving into a retail location and will be signing a new lease. You want to make sure you do things in the right order so that you don’t lock yourself into a lease you can’t pay for.
You need to identify the proposed location where your business will be in your loan request and in your business plan. Generally, you’ll want to talk to the landlord to make sure that the location is available and see if they would be willing to hold it for you while you apply for an SBA loan.
You don’t want to sign a lease until your loan is approved. Unless, you have a backup plan for how you will fund your business. Once the loan is approved, you can sign the lease prior to funding.