What is the difference between a bank loan and an SBA loan?
There is no difference between a bank loan and an SBA loan. The SBA does not loan money directly to the business or owner. They guarantee the loan given to you by the bank in order to reduce the bank’s risk. It is up to the discretion of the bank to ask for an SBA guarantee and only participating banks are involved.
There is no difference between a bank loan and an SBA loan. Except in isolated and special situations, the SBA does not make direct loans. Its loan activity is in the form of participating loans and loan guarantees. You must deal with a bank to reach the SBA. You can think of the SBA as a level above your bank that is providing incentives to your bank to make it easier for you to get debt financing. The bank plays a major role in evaluating your loan application and in administering the loan. The bank’s agreement is necessary before the SBA will get involved. It is up to the discretion of the bank to ask for an SBA guarantee and only participating banks are involved.
