Small Business Today Magazine MAY 2014 CUSTOMIZED REAL STATE SERVICES | Page 24

EDITORIALFEATURE

The SBA Loan Approval

Process and Time Frames                      
By Bruce Hurta

“

It’s not your parents’ SBA!”  The U.S.
Small Business Administration has
been supporting small business owners in the United States since its inception in 1953.  Its lead program, the
SBA 7(a) government-guaranteed loan
program, is one that has evolved into a
very efficient and consistent process for
loan approvals among participating SBA
lenders.  The most important factor to
understand is that the SBA loan approval
process is now a very refined template for
underwriting the loan risk and loan approval decision.  That means the SBA 7(a) loan
approval process and time frames can now
be the same (if not more efficient than) as
conventional bank or non-bank small business financing. 

What is the SBA Loan Program?

There are some popular stories about the
inefficiency of federal government but the
time-tested SBA government-guaranteed
small business loan program is not one of
them.  Instead, this program has generated
measurable economic stimulus objectives,
including favorable job growth, since its inception.  The loan program has evolved into
an indirect loan program whereby the small
business loan recipient receives loan funds
from participating banks, credit unions, and
licensed SBA non-bank lenders instead of
receiving loan funds directly from the government.  The U.S. Government typically
guarantees 75% of that loan against loss for
the participating lender in good standing
with the SBA.  Experienced SBA lenders
earn the PLP or “Preferred Lender” designation from the SBA and they are able to
approve SBA loan applications on behalf of
the SBA without government intervention
in the credit approval process.  The program works well and fills a necessary gap in
credit availability for small businesses in the
United States.
22 SMALL BUSINESS TODAY MAGAZINE [ MAY 2014 ]

 First Steps

The first step in the loan approval process
involves meeting your SBA lender and giving them enough information to evaluate
your loan request for a pre-approval letter. 
The small business owner wants to know
the loan terms he can qualify for before
accepting an offer by the SBA lender.  The
SBA lender wants to know that the small
business will accept and benefit from these
loan terms before conducting the complete underwriting process and preparing
the SBA loan application package for the
borrower.  Usually the borrower’s acceptance of the terms includes paying a deposit to the lender sufficient to cover the
cost of underwriting if the applicant does
not go through with the transaction after
the lender has completed all the work and
is ready to close the loan.  In most SBA
lending shops which have the SBA Preferred Lender designation an applicant can
expect pre-approval and a loan proposal
letter within a week or two of submitting
all the information required by the lender
including but not limited to:

• Personal and business financial statements.
• Last three years personal [