Time running out to apply for loans

September 12, 2009|By ROBERT POOR

Q: We understand there are certain fee-free loans available that are guaranteed up to 90 percent by the Small Business Administration (SBA). Is there a time limit to make application?

A: Better hurry. Earlier this year, the SBA set aside $375 million to temporarily eliminate loan fees and increase the agency's loan guarantee to 90 percent. So far, the SBA reports using about 55 percent of those funds; they have translated to $6 billion in loans under the 7(a) and 504 programs, according to John J. Miller, an SBA spokesman.

However, barring another act of Congress, SBA-backed loans will revert to their prior status by the end of November or December, Miller said. That means guarantees will be 75 percent to 85 percent, making it tougher to get approved for a loan because lower guarantees raise a bank's risk. Additionally, a 2 percent to 3 percent loan guarantee fee again will be required. So since the SBA loan approval process can take as long as 120 days, interested businesses need to step up now.


Here are six ways to speed up the application process for SBA loans:

o Update your financials -- Prepare at least three years of tax returns and up-to-date financial statements, including income and cash-flow statements, balance sheets and sales projections. It also is helpful to have your business plan completed and to include a marketing plan as well.

o Tap a preferred lender -- Use a preferred SBA lender. If your current institution doesn't work with SBA loan programs, the process can take weeks longer than comparable loans at SBA-ready lenders.

o Ensure the right fit -- Find preferred lenders that cater to businesses like yours. For example, some banks won't authorize SBA loans to startups. Others might avoid restaurants or other similarly risky ventures.

o Hedge your bets -- To slash the risk of rejection, apply to a few lenders at the same time.

o Offer more backup -- According to Becky Naugle, the state director for the Kentucky Small Business Development Center in Lexington, despite lower down payment requirements for SBA programs, consider putting down more or offering some sort of personal guarantee. She feels this might help to push it through faster.

o Get help -- An experienced business adviser also can help push your company's loan through faster.

For more information, call the Small Business Development Center at 301-797-0327 or SCORE/Counselors to America's Small business at 301-739-2015, ext. 103. You also can go to for additional details, including SBA lenders by states.

Robert A. "Bob" Poor is a local small business owner/operator. He is chairman of the local SCORE chapter, a small-business counselor and a regular contributor to the Ask SCORE column.

Questions may be e-mailed to him at or by mail in care of The Herald-Mail, P.O. Box 439, Hagerstown, MD 21741, ATTN: Ask SCORE column.

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