How do SBA loans differ from traditional loans?
In theory, the SBA does not decline loans based upon a lack of collateral, whereas traditional loans require the borrower to demonstrate sufficient cash flow and collateral and execute personal guarantees. SBA loans do not necessarily have to be fully collateralized as long as any and all available collateral has been offered. The term of the loan is driven by the use of the proceeds, although the lending terms can be stretched to accommodate a longer time period than most conventional loans. Historically, SBA loans have been unfairly characterized as cumbersome, when, in fact, the SBA loan process has become very user-friendly. Today’s process is highly streamlined and banks have authority to meet the needs of small business owners without the red tape. ALBERT LEE is vice president of Business Banking for Fifth Third Bank, Tampa Bay. Reach him at (813) 306-2414 or albert.lee@53.com.
