Quick guide to Small Business Administration loans
In honor of Small Business Month, Bank of America is recognizing the Small Business Administration (SBA) for its long-standing commitment to small business owners and entrepreneurs. Since 1953, the SBA has been a dedicated resource for helping small businesses start, grow, expand or recover. For more information about the SBA, visit their website.
When small business owners need access to capital, they often encounter obstacles related to how long they have been in business, the amount of revenue they've had in the past two years, high collateral requirements and so on. But if you're looking for affordability and loan requirements that are less stringent, a loan from the SBA might be right for you and your business.
According to an article on Bank of America's Small Business Resources site, SBA-guaranteed loans offer several advantages over traditional, non-guaranteed loans. These include lower down payments and more flexible revenue requirements. For some loans, no collateral is required.
The organization offers several loan programs for a wide variety of needs and company types, but the SBA does not directly lend money; they partner with banks, community development organizations and micro-lending institutions and set guidelines for how those lenders can structure loans. Note that the details of the program are constantly changing, so the more familiar your banker is with SBA loans, the simpler the process could be for you.
Types of lenders that handle SBA loans
- SBA standard lender — This qualified lender must submit transactions for review and receive a guarantee upon approval for every loan.
- SBA preferred lender — This lender is the more qualified of the two types. Loan approval times can be reduced because the SBA checks only the lender's justification of eligibility for the borrower, not their underwriting. Bank of America is an SBA Preferred Lender.
Loans guaranteed by the SBA range from small to large and can be used for most business purposes, including long-term fixed assets and operating capital. Some loan programs set restrictions on how you can use the funds, so check with an SBA-approved lender when requesting a loan. Your lender can match you with the right loan for your business needs.
To learn about the various types of SBA loans, read the article on our Small Business Resources site.
To discuss your business goals, set aside some time for a telephone call with a Small Business Specialist.
MAP3570161 | 4/2021