Winston Rowe & Associates a no upfront fee national commercial real estate advisory firm has prepared this article to assist prospective clients in Small Business Administration (SBA) loans on what they are, how they work and the steps in getting the loan.
If you would like to speak to Winston Rowe & Associates directly concerning SBA financing, you can contact them at 248-246-2243 or visit them on line at http://www.winstonrowe.com
What are SBA Loans:
SBA loans are term loans from a bank or commercial lending institution of up to 10 years, with the Small Business Administration (SBA) guaranteeing as much as 80 percent of the loan principal.
Who can get a SBA Loan:
SBA loans are for established small businesses capable of repaying a loan from cash flow, but whose principals may be looking for a longer term to reduce payments or may have inadequate corporate or personal assets to collateralize the loan.
What Are SBA Loans Used For:
Purchasing equipment, financing the purchase of a business and in certain instances, working capital. The Small Business Administration guarantee can help borrowers overcome the problems of a weak loan application associated with inadequate collateral or limited operating history.
What are the Fees & Costs:
Comparatively inexpensive when looking at other loan sources. Maximum allowed interest rates range from highs of prime plus 6.5 percentage points to prime plus 2.75 percentage points, though lenders can and often do charge less. These rates may be higher or lower than rates on non-guaranteed loans. What's more, banks making SBA loans cannot charge "commitment fees" for agreeing to make a loan, or prepayment fees on loans under 15 year (a prepayment penalty kicks in for longer loans), which means the effective rates for these loans may be, in some instances, superior to those for conventional loans.
Steps in Getting an SBA Loan:
While most banks, as well as select commercial finance companies, offer SBA loans, there are two specialized categories worth knowing about. These are Certified Lenders and Preferred Lenders, both of which have entered into contractual relationships with the SBA and officially participate in the Certified Lender/Preferred Lender programs (CLP/PLP).
If you are seeking a loan, your best bet is to work with a certified or preferred lender. The SBA-guarantee process is tricky at best, and you want a lender who has been through it more than once
These lender programs were designed to provide better response to borrowers; they accomplish this goal by placing additional responsibilities on the lenders for analysis, structuring, approval, servicing and liquidation of loans, within The Small Business Administration's guidelines. About 850 lenders qualify for the SBA's Certified Lender Program, having met certain criteria, the most important of which, from the borrower's perspective, is extensive experience in SBA loan-guarantee processing.
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Winston Rowe & Associates
31408 Harper Ave
Saint Clair Shores MI 48082
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