SBA Lenders and Banks
SBA commercial lenders are mostly banks that receive a guarantee from the Small Business Administration, that in case of borrower default, the bank will receive the bulk of their capital back. With SBA 7a loans the guaranteed portion of the loan balance is normally 75%. On SBA 504 loans the guaranteed portion is on the second lien position loan, which is whatever the loan balance is higher than 50%. In other words if the total loan to value is 90%, 40% of the loan would be the SBA loan.
(For borrowers that are looking for options on their own SBA loan request we urge you to contact us at 248 885-8797 to discuss your situation or the fill out our pre approval form. We are still closing loans and likely can help you. Our minimum loans size $650,000.)
The importance of this for the borrower is that because of the assurance the funding bank receives from the Small Business Administration, they are able to offer more aggressive loans than would be possible. For example it is common for the SBA to offer 90% financing on purchases. And via the 7a program it is possible to get 85% financing on refinances. In comparison, conventional bank loans are often capped at 70% -75% on purchases or refinances.
Also banks that work with the SBA will consider many special use properties that a lot of banks will not look at without the aid of the program. For example car washes, restaurants or motels are three good example of building types that many non SBA banks won't even consider.
SBA Commercial Lenders
SBA commercial lenders are in general divided into three categories: banks that hold the PLP (Preferred Lender) status through the SBA 2. Banks without the PLP status and 3. Though rare, lenders that are allowed to work with the SBA that do not hold a bank license. Some of these lenders hold the PLP status as well.
In general, borrowers should consider working with PLP lenders or banks rather than institution that do not hold this designation. The status is earned and awarded by the SBA to banks that continuously meet quantity and quality agendas set by the SBA. Borrowers can feel assured that if they are working with a PLP lender that the bank knows what they are doing.
Another major benefit of working with a PLP lender is that the loan only has to be underwritten once by the bank. The SBA basically just rubber stamps their approvals and provides the guarantee. In contrast, with non PLP approved banks, the file has to be underwritten twice. Once by the funding bank and then again by the SBA. This is where those horror stories of the 6 months to close come from.
In general owner occupants should take a very hard look at what the SBA loans have to offer, as there are some great terms available. Also, borrowers should keep in mind that not all SBA programs or banks are the same. There can be a big difference in what is offered and what the underwriting guidelines are between institutions.
We have the experience and expertise to get your SBA loan closed. We know which SBA Lenders are still funding loan requests. Get pre approved now by filling out our form so that we can provide you meaningful answers.
Feel free to call us as well.
248 885-8797
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