Once you decide a Small Business Administration (SBA) loan is right for your business, you’ll need to find an SBA-approved lender that meets your needs.
SBA lenders come in many forms, from your local community bank and the national bank branch located near your office to online-only or even SBA-only lenders. No two are the same, and there’s much more to compare than the customer service of a community bank or the convenience of an online bank.
Since the Small Business Administration requires lenders to possess a great deal of knowledge about the businesses they lend to, many lenders choose to specialize in a few industries. And because regulators prefer banks to keep their lending portfolio diversified, some banks may not want to lend to anyone in your particular industry—while others may actively seek you out.
Depending on your needs and values, here are some questions to ask potential SBA lenders:
What are your loan processing times?
Each SBA loan’s processing time is different, but most applications will take at least two to three months to be processed by the SBA. On top of the application processing, it will take you and your lender a least a few weeks to complete your business plan and financial paperwork.
Having an SBA lender who has lots of lending experience—especially experience lending to your industry—can help speed up the paperwork portion of the application.
Applying for your SBA loan through an SBA preferred lender can streamline the process. Members of the SBA Preferred Lender Program have shown their ability to process SBA loans correctly. In turn, the Small Business Administration gives preferred lenders the power to approve your SBA application directly.
How experienced are your SBA loan experts? Are they dedicated exclusively to the SBA loan market?
Most banks have an SBA lending program that’s part of their standard business lending operation. This is beneficial to some small business owners who already have a relationship with a lender at their bank. On the other hand, experienced SBA loan experts are better-equipped to navigate the highly specific SBA lending regulatory environment, and a dedicated SBA lending staff can help catch common application mistakes and speed up processing times.
Are you familiar with my industry and have you worked with similar businesses in the past?
Because the SBA loan application process requires so much information about the interworking and financial forecasting of your specific business, a lender who has worked with companies of similar size and scope (or businesses in the same industry) will bring a lot to the table. They’ll know what information you need to provide for a better chance of being approved, as well as which particular SBA loans will best help your business.
Can you offer me strategic advice beyond the financials, even after my loan has closed?
Not only can lending experts with experience in your industry give you a better chance of being approved, they can also help you make the best use of your funds. Many SBA lending experts have additional experience applying SBA funds to debt consolidation, business acquisitions, partnership buyouts, generational transfers, franchising, or any number of other reasons business owners apply for SBA loans. That added experience can be beneficial for you as a small business owner.
How accessible is your staff? What are your work/communication methods?
Which SBA lender is going to be able to devote the most time helping you put together the most compelling application? You may want to work with a lender who is quick, to the point, and conducts all business through email. Or you may want to find a lender who will sit down with you and talk about options over coffee. Talk to your lender beforehand to discuss your expectations and their communication methods.
How involved are you in your community? Do you give back to it?
Small businesses are the backbone of the communities in which they serve. Because you and your business work so hard to serve the community around you, you should expect your SBA lending partner to do the same.
There are no right answers to any of these questions, because your business and your needs are unique. Similarly, there’s no one-size-fits-all bank or SBA lender. Choosing the right bank, lender, and loan program for your business are some the most important decisions you’ll make in your business, so take your time and consider all of your options.