Securing a business loan can be a lengthy process. However, working with a Small Business Administration (SBA) Preferred Lender can significantly speed things up. These are banks, credit unions, and other financial institutions authorized by the SBA to approve loans on its behalf.

This authority streamlines the loan approval process, giving small businesses faster access to the funding they need through the SBA’s main loan program, the 7(a) program.

Standard Lenders vs. Preferred Lenders

When a lender doesn’t have “Preferred” status, they must submit your loan application directly to the SBA for approval. This extra step can add significant delays to the process.

In contrast, a Preferred Lender has the authority to make the final credit decision themselves, which makes the entire process faster and more efficient.

Before we explore the benefits of working with an SBA Preferred Lender, let’s cover the basics of the SBA 7(a) loan.

Understanding the SBA 7(a) Loan

The SBA 7(a) loan program helps for-profit small businesses secure funding for a wide range of purposes. These loans are popular for their flexibility and favorable terms compared to conventional loans.

Key Advantages of SBA 7(a) Loans

• Access to Capital: They provide funding opportunities for startups and businesses with limited operating history that might not qualify for traditional financing.
• Flexible Use of Funds: You can use the loan for working capital, purchasing equipment, buying real estate, acquiring another business, refinancing debt, and more.
• Longer Repayment Terms: With terms up to 25 years, businesses can benefit from lower monthly payments.
• Lower Down Payments: These loans often require a smaller upfront cash investment compared to conventional loans.
• Government Guarantee: The SBA provides a partial guarantee to the lender, reducing their risk and making them more willing to lend to small businesses.

Who is Eligible for an SBA 7(a) Loan?

To qualify, your business generally must:

• Be a for-profit business operating in the United States.
• Meet the SBA’s definition of a small business for your industry.
• Demonstrate creditworthiness (requirements vary by lender).
• Show a reasonable ability to repay the loan.
• Have a detailed business plan.
• Be able to pledge collateral (though a lack of collateral alone won’t disqualify an application).

Loan Terms and Amounts

• Loan Amounts: The maximum standard 7(a) loan is $5 million, though some lenders may offer more.
• Maturity Terms: Repayment terms can extend up to 25 years.
• Prepayment: Borrowers often have the flexibility to prepay their loans with limited or no penalties.

For complete details, it’s always best to visit the SBA website.

Top 5 Benefits of Working with an SBA Preferred Lender

Choosing a Preferred Lender offers several distinct advantages for small business owners.

1. Faster Loan Approval: Since they can approve loans in-house, the timeline is often much shorter. This is a major benefit when you need quick access to funds.
2. A Smoother Process: Preferred Lenders are experts in SBA requirements. They know exactly what documents are needed, which helps make the application process more efficient from start to finish.
3. Local Decision-Making: Many Preferred Lenders are local or regional institutions with a strong understanding of the local business environment, leading to more personalized service.
4. SBA Expertise: Their experience allows them to guide you through the complexities of the application, ensuring you maximize the benefits of SBA financing.
5. Loans Tailored to Your Needs: They are skilled at structuring loans with terms that align with your specific financial situation and business goals.

Working with Leading Edge Commercial Capital means you’re not just getting a loan; you’re gaining a partner with SBA Preferred Lending status and unmatched expertise in business lending.

Contact a member of our lending team today for a no-obligation introduction call.