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Choosing SBA Loan Applicants
SBA loan applicants are chosen based on several criteria. Each of these qualifications is designed to make sure that SBA and the lender get a return on their investment in the small business.
Eligibility Requirements
In order to be eligible for SBA loan programs, the borrower must meet certain qualifications in relation to their business. The SBA has made these quite broad, to give a wide range of businesses the ability to qualify. The size of the business must meet the standards set by the SBA. These standards vary depending on the field in which the business will operate, but they are designed to provide a definition of a "small business." Also, the business must be a for-profit endeavor. They cannot already have the funds in their possession to finance the need, and they must be able to demonstrate that they have the capability to repay the loan.
Character Considerations
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The other factor that the SBA and their participants consider is the character of the business applying for the loan. The applicant must have a history of repaying their debts and a good reputation in their community. To determine this, the SBA obtains a "statement of personal history" from the applicants.
Benefits of SBA Loans
A basic 7a loan has benefits not only for the borrower, but also to the lender. Because the SBA is behind the loan, and has determined that the borrower is a good risk, many lenders are more willing to finance the loans. They are not putting as much of their money at risk, because the government is backing the loan as well as the lender. This benefits the borrower, because if they can prove that their business endeavor is legitimate and profitable, they are much more likely to get financing.
Seeking SBA 7a loans is a good option for small businesses that need capital for start up expenses, or for expansion needs. Because they are backed by the Small Business Administration, qualified applicants are much more likely to get approval from the lending participants. This makes a 7a loan one of the best options for financing small business needs.
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