Looking for an SBA loan
Are you looking for an SBA loan but not sure which banks to approach? For business buyers who want third party finance to buy a business, an SBA loan is probably the second and only place to start. The first place is family and friends and if you have unsuccessfully tried that option you are probably looking for a good SBA lender.
The SBA lenders are approving loans. The loans are not approved quickly and easily and this is for many reasons. I recently spoke to an SBA lender and he advised that for every 12 applications he receives he’ll approve one loan.
Why is it so difficult? The reasons are many. Here are a few.
- Different lenders have different interests in different industries. Some lenders do not like lending for a buyer to buy a restaurant, gas station or the construction industry to give a few examples. The reasons include they may have approved loans previously and had bad loan default experiences.
- The credit score or credit report of many lenders has been damaged recently due to the recession. A default on re-paying a home loan that had a tax payer guarantee will preclude a buyer from getting an SBA loan as the SBA loan is also taxpayer guaranteed and by law an SBA lender cannot ask the taxpayer to take a loan risk on the same person twice.
- I recently closed an SBA loan that took about 6 months to approve. One of the borrowers had a criminal conviction from their earlier years and this required a special review and then final approval from the SBA in Washington, DC.
- As a result of the collapse of the bank system in 2008 there is a raft of new bank regulations. The FDIC, SBA and other regulators are much more aggressive with their review of a bank and any underperforming loans they may experience. The regulators are tougher and as a result, the banks are slower and more cautious approving loans as they do not want to draw attention to themselves.
- This tougher approach of the regulators has put more banks and in particular their underwriter under pressure. If an underwriter is concerned they may get it wrong it’s just easier to decline the loan.
If you are looking for an SBA loan and want to know which banks are lending, the following link will take you to a report from the SBA Regional Office in Citrus Heights – SBA loan by bank for 2013.
Bear in mind there is a 7(A) loan to buy a business and 504 loan to buy real estate. 7(A) loans for a business are harder and may require bank shopping to see if you can get approval. If you are looking for a 504 loan, the following link will take you to a report from the SBA Regional Office in Citrus Heights – 504 SBA loans by bank for 2013.
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. If you would like more immediate help, you are welcome to send anemail to Andrew Rogerson or give me a call on 916 570-2674.