SBA financing sources


There are a lot of myths running around about SBA loans. Some bankers are telling their clients that they need perfect credit. Other bankers tell you what they think are actual guidelines from SBA when these are just local rules. Here is a list of a few of the common myths.

Myth #1 
An SBA loan requires a 700 FICO score or better.

Good credit can always help but it will neither make nor break the entirety of an SBA loan. Lenders look at a variety of things including the 4 c's (Character, Credit, Collateral, and Capacity) as well as a lot of other factors. These may include the lender's success or failure with the industry, the lending ratios, and the history of the existing business. The Small Business Administration actually has no FICO requirement, most lenders say you need a 680 FICO however some will make loans down to a 600 FICO. The individual lender decides what an acceptable FICO score is for the loan. Along with personal credit of the principals of the company that own 20 % or more several other factors are considered including the business plan, assets of the business,

Myth #2 
I can't get an Small Business Administration loan if I've had a bankruptcy

The only regulations relating to Small Business Administration financing and bankruptcy come from individual lenders. Lenders usually will not give any financing to a business or an entity to an individual or a business in a chapter 7 or 11.

Myth #3 
I can't get an Small Business Administration loan if I've defaulted on an previous loan.

It is possible to get another Title IV loan if you have defaulted; however you are required to settle the guarantee portion with the government.

Myth #4 
SBA loans are only for U.S. Citizens

Legal aliens can obtain an SBA loan. As always the lender will look at all of the same criteria required of a borrower who is a citizen.

Myth #5 
An SBA loan is the best way to buy a business.

Saying an SBA loan is the best way to buy a business is like saying all people should drive cars. There are a lot of resources to get you from point A to point B but one size never fits all.

Myth #6 
The best way to submit my Small Business Administration loan is through my local bank.

Some banks will assist you in the process of compiling your SBA loan; however new businesses are arising where former SBA loan officers will help you package your loan and send it to multiple lenders. I highly recommend these services if they are provided by qualified professionals. These individuals may process your loan for a flat fee or an origination fee. You definitely need to check out the person who is putting together your loan; however most local banks don't want to give you the time and care that will be beneficial to you.

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