Small Business Today Magazine APR 2014 MONTGOMERY ROTH | Page 27
EDITORIALFEATURE
Should I Use a Broker to Find
My SBA Lender?
By Bruce Hurta
A
common question I hear from small
business owners is whether or not
it is beneficial to use a broker when
seeking SBA financing. My answer is
almost always no, it is not necessary.This is
not because I think brokers don’t have a
place in business lending. There are many
loan brokers who can give good direction
and financial advice to help you grow your
business. But when it comes to SBA loans,
I think it is best to work directly with a reputable SBA lender for these main reasons:
Established Relationships
If you already have a business relationship
with a bank or credit union that provides
SBA lending, it makes sense to go to them
first.You have a track record with them already (hopefully a good one) that can help
in the application process. I think this is especially true of smaller community banks
and credit unions that can take the time to
get to know their small business customers and understand their goals and needs.
Product Placement
The SBA has many products that cater to
a wide range of borrowers. For example,
the SBA 7(a) loan program is a partially
government-guaranteed loan program
that allows participating lenders to assume
more risk than they would by originating conventional bank financing. With this
product, there can be lower down payments, longer repayment terms, and easier
qualifying criteria than conventional bank
financing because the lender’s repayment
risk is reduced by the partial government
guaranty.
But not every SBA lender is equal and
lending criteria varies by institution. How
do you know if the broker in your transaction is going to find an SBA lender who
If you’re a small business
owner seeking funding
for a new project,
you do not need a broker
to find a suitable
SBA lender.
will approve your financing? Is the broker’s
recommendation the best one for you to
follow? The answer is, “It depends.” Lenders who specialize in SBA loans will be
most familiar with the various products
and their strengths and weaknesses, so
they’ll be more adept at prequalifying you
and placing you in the product that best
meets your needs and financial profile.
Turnaround Time
Working directly with an experienced
SBA lender can speed up the application and approval process. Government
guidelines are always changing, but as an
SBA specialist, they’ll be on top of recent
changes and new product guidelines for a
smoother application process. If time is a
factor, you’ll also want to choose an SBA
Preferred Lender as they can complete
the entire process in-house without having to send your application to the SBA
for approval.
How Do You Find the Right SBA Lender?
If you’re a small business owner seeking
funding for a new project, you do not
need a broker to find a suitable SBA lender. Any SBA loan expert will be happy to
refer you to a trusted and experienced
lender in your area. The SBA also has excellent resources online. Check with your
local district SBA office and with your local
SBA lending trade organization for recommendations of accommodating SBA lend-
ers for your particular loan request. You
can find your local district SBA office at
www.sba.gov.The professional trade organization for the Houston area SBA lenders
is called the Houston Association of Government Guaranteed Lenders. Their web
site is www.haggl.com.
If You Do Choose to Work with a Broker
If you do choose to go through a broker,
make sure it’s one that specializes in your
industry. The best SBA lender recommendations come from brokers who are very
experienced with transactions involving
the industry represented by their small
business client. Having had other clients
who successfully achieved SBA financing
for similar businesses in that industry is an
indication that the broker knows from his
own experiences which SBA lenders have
been most accommodating in the business owner’s market.
Also, having successful experiences placing the financing for their clients, these
brokers are in a position to help the applicant gather all the information necessary
to make the transaction successful. The
broker is motivated to get the deal done
as quickly as possible because he will be
earning his sales commission and loan referral fee. If he is experienced with transactions like yours, he is not likely to refer
you to an SBA lender that does not have
an appetite for your business.
You can learn more about SBA lending and small business finance on Bruce’s blog at brucehurta.wordpress.
com. For more information about SBA real estate loans
for small businesses, contact Bruce Hurta, Business
Lending Manager at Members Choice Credit Union,
at 281-384-2595 or by email at [email protected].
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