If you’re a new business owner, your ears probably perked up the first time you heard about Small Business Administration (SBA) loans. With generous term lengths, interest rate caps, and low down payments, these loans can jumpstart your new business. However, if the loan process is slower than you planned, it could delay your launch and hold back the whole operation.
Not all new business owners realize it, but there is a single trick that can speed up your SBA loan process and improve the entire loan experience: choosing an SBA-preferred bank.
Wondering how SBA-preferred lenders speed up your loan timeline? Here’s how SBA-preferred banks work and how to get an SBA loan quickly with one of these designated lenders.
What is an SBA-preferred bank?
An SBA-preferred bank is a financial institution that has earned accreditation under the SBA Preferred Lender Program (PLP). This lending status is the highest stamp of approval a bank can receive from the SBA. It shows that the bank’s team understands how SBA loan policies work, and the bank has a solid track record of processing and managing SBA loans.
Because they’ve secured the SBA’s trust, lenders that are dubbed “SBA-preferred” receive special lending privileges. That means SBA-preferred banks can process and dole out loans faster than other lenders.
Here are a few reasons why:
- SBA-preferred banks are allowed to grant in-house approval.
- They’re approved by the government and are deemed trustworthy.
- They are experts in all the SBA loan options.
- They often provide better loan terms and lower down payments.
What is a non-preferred bank?
Non-preferred banks are lenders that haven’t received this SBA-preferred status. A bank does not need to hold an SBA-preferred designation to be able to grant SBA loans.
However, because they haven’t earned the same level of trust with the SBA as SBA-preferred lenders, non-preferred banks can’t bypass much of the red tape that’s involved in these loans, and they won’t be approved to offer many of the same benefits.
For instance, non-preferred banks need the SBA to review loans at various stages before they move on to the next step. That can cause major delays in the process. At the same time, they don’t have the same financial backing from the SBA and often don’t offer the same loan options, rates, down payment advantages, and other major perks.
How do I get an SBA loan the fastest way possible?
If you want to secure an SBA loan as fast as possible, working with an SBA-preferred bank is essential. Not only do these banks have the authority to process, service, and close loans on their own, but they also are stocked with experienced professionals who know how to anticipate and navigate SBA loan holdups.
Still, there are even more ways to speed up the SBA loan process. Here are a few tips to help you secure a business loan as quickly as possible.
1. Prepare documents before you apply.
In order to get approval for an SBA loan, you’ll need several documents on hand. That includes things such as tax documents, company bylaws, and proof of ownership.
By pulling all of the critical documents together early on, you can push approval through faster and speed up the loan timeline. Don’t stress if you don’t know what documents you need. A seasoned lender will tell you exactly what documents you should gather, along with anything you’re missing.
2. Work with an internal team of experts.
If you’re trying to do everything on your own, it can lead to mistakes and setbacks. That’s why it’s smart to rely on a full team of experts during the loan process, including your bookkeeper, a tax professional, and an attorney.
3. Choose a bank that’s eager to communicate with you.
Not every bank will give you the same level of attention, and being on hold for hours or playing phone tag can derail your loan experience. Be sure to work with a community bank that has your best interest in mind. Banks that communicate early and often tend to be more likely to answer your questions, walk you through the loan process, and help push your loan past the finish line faster.
Use expert tips to secure your business loan.
SBA loans can be an excellent option for new business owners, but not every lender is set up to deliver these loans at the same speed. SBA-preferred banks are trusted by the SBA and hold the authority to push your loan through faster than non-preferred banks. By leaning on an SBA-preferred lender’s help and following a few time-saving best practices, you should be on your way to landing capital in a hurry.
Want to ensure your business loan process flows as smoothly as possible? Download our 5 Tips for Securing Business Loans checklist to see what you need to prepare for a successful loan.