When you apply for a small business loan backed by the SBA or the Small Business Administration, you’re essentially requesting that they provide a guarantee that you’ll repay, even if they’re not really the ones loaning you money directly. However, this whole process can take a long time and for owners of small businesses — time is gold.
The good news for you is that this seemingly long and complex loan approval process can be expedited and simplified with the SBA Preferred Lenders Program or PLP.
The Benefits of using SBA Preferred Lenders
Lenders without the preferred status must send out loan applications to SBA and wait for their approval that can take as long as a month, venturebankonline.com explains. On the other hand, an SBA preferred lender could underwrite loan applications without having to get SBA approval. This will significantly reduce your waiting time since your loan won’t have to go through the SBA.
SBA preferred lenders also offer loans that come with reduced payments and longer repayment schemes. You won’t have to worry about prepayment penalties provided that you won’t use your loan for commercial property. You can also choose to use your loan to purchase an existing business, start your own business, or buy commercial property with only 10% down payment.
Why Preferred Lenders are Preferred by the SBA
Note that not all SBA lenders can be given the “preferred status”. Only lenders with an established success record regarding servicing and processing loans backed by the SBA can apply. The SBA also takes into account the lender’s loan volume, performance, and strong knowledge or procedures and policies set by the SBA. A preferred status will only last for two years at most and the SBA must first review lenders vying for recertification.
On a final note, when choosing an SBA preferred lender in Minnesota, go with a lender that caters or specializes in giving out loans similar to your business type to make certain that you increase your chances of being granted an SBA loan.