The SBA Underwriting Process

If you’re looking to obtain a loan for your small business, the SBA underwriting process is a key element in getting approved. The underwriting process is how lenders evaluate whether or not you’re a good investment, how much financing is appropriate and what financing terms make sense. The underwriting process typically takes about a week or two and can involve the lender asking for a variety of information on the borrower, including background information, financial statements, personal credit reports and business plans.

In addition, the SBA requires that you have adequate collateral to secure the loan. This can include real estate, equipment or cash. In some cases, you may be required to sign a personal guarantee that would protect the lender in the event that your business cannot repay the loan.

SBA Underwriting Process: Key Factors for Loan Approval

When undergoing the underwriting process, be sure to be honest and provide complete documentation. This will help speed the process up. Also, keep in mind that the underwriters are looking for assurance that you will be able to meet the financial projections and that you will be able to make the repayments. This is because the loans are guaranteed by the SBA which will step in if you are unable to pay off your loan.

We recently had a client who submitted applications to two different lenders; one of them is part of the SBA’s Preferred Lender Program. The other is not and had to work through the full underwriting process. Both lenders were very thorough and asked for a large amount of documentation on the buyer, business, and personal finances.

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