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Small Business Administration Loans; SBA Loans; Government Backed Loans
The Small Business Administation (SBA) establishes small business size standards which are based either on the number of employees or its annual receipts. The government establishes a goal or objective of awarding a certain percent of its total contract dollars to small businesses.
The U.S. Small Business Administration (SBA) has loan programs available to small businesses that are unable to secure financing through commercial banks or finance companies on reasonable terms. SBA loan programs work through private-sector lenders. Loans made are guaranteed by the SBA which does not make any direct lending. Most lenders including banks and credit unions are familiar with the SBA loan program process.
Some of the more common complaints made by borrowers about the SBA loan programs include:
- Extensive documentation requirements;
- Long waits for approval;
- Extensive collateral requirements on SBA guaranteed loans
One of the concerns expressed by credit professionals about customers with SBA loans is that the SBA is considered by some to be a lender of last resort. The implication is that an SBA loan is a red flag about a possibly high risk customer or applicant.
© 2011 by Michael C. Dennis. All Rights Reserved. Michael is the author of "Credit and Collection Handbook." E-mail questions or comments to him at mcdennis13@yahoo.com