5 Misconceptions About SBA Lending.
1. All SBA loans are alike.
The truth is, there are SBA loans for very diverse and specific purposes.
2. All SBA lenders are the same.
There are various categories of lender programs:
The truth is, there are SBA loans for very diverse and specific purposes.
- That’s great for tailoring to customers, but it presents a complex landscape to navigate without expertise.
2. All SBA lenders are the same.
There are various categories of lender programs:
- SBA 7(a)CDC / SBA 504
- SBA CAPLine Lines of Credit
- SBA Export Loans
- SBA Microloan Program
- SBA Disaster Loans
3. SBA sometimes fails to honor its guarantee.
SBA has a legal responsibility to honor the guarantee. Banks without experience fail to meet necessary conditions.
SBA has a legal responsibility to honor the guarantee. Banks without experience fail to meet necessary conditions.
- Failure to comply with SOPs
- Failure to make, close, service or liquidate a loan in a prudent manner
- Lender has failed to disclose or misrepresented a material fact to SBA
- Lender has failed pay the guarantee fee
4. It takes additional bank staff to administer SBA loans.
Not any more than any other loan your make. It is true submission and servicing takes specialized diligence.
Not any more than any other loan your make. It is true submission and servicing takes specialized diligence.
- The Bank Solutions process save your loan officer processing time when he/she could be developing personal banking relationships.
- The Bank Solution process provides the diligence necessary for servicing, reporting and compliance.
5. It takes forever to get SBA loans approved.
This misconception relates directly to inexperience.
This misconception relates directly to inexperience.
- Diligence
- Underwriting
- Submission
Common Lending Errors, or Why SBA Loans Are Rejected.
ELIGIBILITY
- EPC Conditions not met – 12%
- Credit Elsewhere Not Documented – 10%
- Prior Loss to Gov’t Documentation – 10%
- Size Determination Conditions not met – 10%
- Debt Refinancing Conditions Not Met – 8%
UNDERWRITING
- Loan Authorization Deficiencies – 28%
- Credit Analysis Deficiency – Ratio Analysis – 20%
- Appraisal / Business Valuations Not Obtained – 8%
- Credit Analysis Deficiencies – Various – 8%
- Credit Analysis Deficiencies – Collateral Analysis – 7%
- Credit Analysis Deficiencies – Proforma Financials / Balance Sheet – 5%
CLOSING
- IRS Tax Transcripts Not Obtained – 15%
- Other Insurance Requirements Not Met – 11%
- Collateral Lien Deficiency – 12%
- Equity Injection Verification Not Obtained – 10%
- Hazard Insurance Not Obtained – 8%
- Life Insurance / Assignment Not Obtained – 7%
- NEHRP Requirements Not Met – 5%
How We Make You Successful.
- Aggressively Market for Loans
- Train Loan Officers on SBA “How To”
- Screen for SBA Eligibility
- Work with the borrower to find ways for you to say “Yes”
- Customize SBA documentation checklists for borrower
- Organize file in SBA preferred 10-Tab Format
- Prepare Credit Memorandum that is SBA compliant
- Train Credit Department to Meet SBA underwriting standards
- Provide necessary services to borrowers
- Monthly 1502 Reporting
- Facilitate Secondary Market Sales
- Handle 327 Actions
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