In this article, we will answer, “What Is An SBA Preferred Lender?” We will also tell you how to find SBA preferred lenders, as well as some of the benefits and drawbacks of working with SBA-preferred lending institutions.
Getting an SBA loan is famously difficult because of how competitive the market is, how much documentation is required, and how lengthy the process takes. However, because of the low interest rates, huge borrowing quantities, and flexible repayment terms that come with these loans, small firms are ready to devote the time and effort that is required.
It usually takes anything from sixty to ninety days to complete the entire procedure, which includes the application, the approval, and the funding.
Thankfully, there is a more effective method.
Borrowers are able to obtain SBA loans from SBA Preferred Lenders far more quickly than they would from a regular SBA lender. This helps streamline the entire financing process, which is a win-win situation for both you and the lender. They have gone to great lengths and jumped through hoops to achieve this Preferred Lender accreditation from the US government.
Are you curious about the ways in which an SBA Preferred Lender can assist you in obtaining much-needed finances more quickly? We will provide you with all of the information that you need.
What exactly is meant by the term “SBA Preferred Lender”?
When you apply for a Small Business Administration loan, your application must first be approved by your lender, and then you must wait for approval from the SBA. The procedure for approval by your lender is probably very speedy and uncomplicated, but once your application is sent to the SBA, things are likely to move much more slowly.
The SBA came up with the Preferred Lenders Program (PL) in order to get over this obstacle. This initiative allows lenders the ability to make the final credit decision on SBA loan applications, which streamlines the entire process and eliminates the need for SBA approval, which can take anywhere from four to six weeks.
However, becoming an SBA Preferred Lender is not open to all lending institutions. This certification is only given to lenders that have successfully processed and serviced SBA loans over an extended period of time.
In addition to this, the Small Business Administration will consider the lender's processing volume, performance, and level of familiarity with SBA policies.
The Small Business Administration will take the lender's risk level into consideration as well. Since the SBA is still providing financial backing for these loans, the organization wants to make sure that lenders reduce risk while still providing loan servicing to firms who have a requirement for it.
Those lenders who are granted PLP status do not maintain it indefinitely. The term only lasts for two years, after which the lenders are required to go through the recertification process once again.
Why It Is Necessary for Your Small Company to Collaborate with an SBA Preferred Lender
When searching for an SBA loan, you should always attempt to first collaborate with a Preferred Lender in order to maximize your chances of success. Not only are these banks and alternative lenders able to simplify the process of obtaining an SBA loan, they are also the most knowledgeable about the ins and outs of these loans.
You should almost always engage with an SBA Preferred Lender because of the following reasons:
Move quickly since time is money
You will have a quicker time getting accepted and funded when you work with PLP lenders because they can process everything in-house. Because of this, you won't have to wait for weeks.
Reliability is the Best Option
To keep their status, which indicates that they have a demonstrated track record of successfully funding SBA loans, lenders are required to put in a lot of effort. You can put your faith in these moneylenders.
Documentation
Because the underwriting process will be completed in-house by your lender, there is a high chance that you will not be required to produce the mountain of paperwork that the SBA wants to see.
It is in your best interest to look for a new financial institution to process your SBA loan if the one you are currently working with is not an SBA Preferred Lender. Even if time isn't your primary issue, working with these lenders will make the process more streamlined and less stressful.
The Key Differences Between a “PLP” and a “CLP” Small Business Administration Lender
In your research, you may have seen some lending institutions claiming that they are part of the “certified lender program” or “CLP.”
There is a distinction between PLP lenders and CLP lenders. Through the Certified Lender Program, also known as CLP, approved lenders are able to service SBA-backed loans in a manner that is more simplified. CLP lenders have the ability to use their own application forms and documentation, provided that it has been approved by the SBA; nonetheless, the SBA has the final say on whether or not the approval is granted.
The approval of your loan application will take longer than it would with a PLP lender since it will still have to go through two separate underwriting processes (the bank’s and the SBA). However, a CLP lender is able to process your loan application more quickly than a non-preferred or non-certified lender, so they are not a terrible choice.
By establishing a strong track record of servicing Small Business Administration loans, lenders can qualify for CLP designation. They are eligible to submit an application for the CLP designation if they have a track record of profitable lending and have demonstrated that they can collaborate effectively with the Small Business Administration office in their community.
Remember, you can always count on SBALoans.blog’s experienced commercial loan advisors to give you unvarnished advice on choosing the best SBA lender for your particular financing situation.