Who is Approving SBA Loans
Looking to buy a business and need third-party finance? Looking to sell your business and don’t want to offer seller finance? The SBA program is a source of finance for buyers to use to buy a business and become an entrepreneur. The Federal Government administers the SBA or Small Business Administration and is therefore a program backed by the US Tax payer.
For a buyer to qualify for a loan they need to meet a minimum set of criteria. The SBA sets the loan criteria with all loan applications made through the national, state and regional banks that have been approved to handle loan applications.
An SBA loan is of great assistance to the buyer and seller of a business. However, it’s important to check the SBA loan performance data in 2015 to find out which banks are lending; especially in Northern California as not all banks are willing to lend to all buyers in each industry. Some banks prefer to not approve loans for certain industries as they are considered more risky such as restaurants while some lenders like lending for gas stations and liquor stores while others do not. The SBA loan program is not available for buyers that wish to buy a business that includes gambling or the sex industry.
In addition to loans being available to buy a business, they are also available to buy a franchise. The franchise can be an existing franchise owned by a franchisee or a brand new franchise opening in a local market.
Who is approving SBA Loans?
The SBA has its head office in Washington, DC. Spread around the United States are support or regional offices that provide different services including support to the lenders in their region.
The SBA has a regional office in Citrus Heights, CA. Citrus Heights is located in Sacramento County. Because the SBA is a government agency, they also provide reports to the public on SBA lending. If you would like to know the total amount of SBA loans approved through the SBA Sacramento District Office, SBA loans approved by bank and SBA loans approved by county from October, 2014 to May, 2015 the details are available below.
- Click this link to see: SBA Sacramento District office loans approved from October, 2014 to May, 2015.
- Click this link to see: by bank from October, 2014 to May, 2015.
- Click this link to see: by county from October, 2014 to May, 2015.
If you would like to apply for an SBA loan to buy a business or franchise it is a formal process. There are many forms to complete and you will need to have a good credit score, a good credit history and a downpayment of about 20% of the amount you wish to borrow if you are buying an existing business or franchise with an SBA 7(A) loan.
If the funds are to buy an existing business, the lender will want to see management experience in that industry.
If you own a business and are thinking of selling, one of the steps I take is to get the business pre-approved for an SBA loan. This means contacting SBA lenders, provide background on the performance of the business so they can do an analysis to see if the business meets their lending criteria. If it does, they would provide a written confirmation. It does not mean the lender will definitely approve a loan to a buyer but’s its half of the process. Each buyer would be reviewed and approved on their own merit. If you have questions, give me a call on 916 570-2674.
If you wish to buy a piece of real estate with a building you will want to get an SBA 504 loan which requires a downpayment of 10%.
If you would like more information about selling a business, buying a business, buying a franchise or a related service such as valuing a business, please visit my webpage Services and choose from the drop down menu the information you would like.
For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.