SBA loan performance data in 2015

An SBA loan is of great assistance to the buyer and seller of a business. However, it’s important to check the SBA loan performance data in 2015 to find out which banks are lending; especially in Northern California as not all banks are willing to lend in each industry.

If a first time buyer is looking to buy an existing business or franchise, the primary source of third party lending continues to be an SBA loan. As the economy continues to heal from the Great Financial Crisis that started in 2008, banks are unwilling to make conventional loans to first time business buyers.

The reason may not have anything to do with the quality of the business buyer, their credit score and credit history and their downpayment. It may simply be because the banks that underwrite and approve these loans through the Small Business Administration, receive a guarantee that allows them to offset some of the losses they may incur if a borrower defaults.

SBA lenders under greater scrutiny

Additionally, the banks be they large and “too big to fail” such as Chase, Wells Fargo or Bank Of America or smaller regional banks, community banks or credit unions are under intense scrutiny by the FDIC through the Dodds Franks Act to ensure all the loans they underwrite and approve are done to the highest standard. One of the best things about the SBA loan process is that it’s incredibly detailed and so this forces underwriting to be done at the highest standard or the SBA will not pay the default fee. One of the worst things about the SBA loan process is that’s it’s incredibly detailed and because banks receive such generous payments if there is a default, there’s no incentive for them to write any other types of loans.

Read More: Here is more information about finance/SBA loan to buy a business or franchise.

The Small Business Administration or SBA has its head office in Washington, DC. Spread around the United States are support or regional offices that provide different services including support to the lenders in their region.

SBA loan activity from October 2014 to March 2015

The SBA has a regional office in Citrus Heights, CA. Citrus Heights is located in Sacramento County. Because the SBA is a government agency, they also provide reports to the public on SBA lending. Because I’m very active with SBA loans, I receive a copy of the different reports and you can read this information to help guide you about who is and is not approving SBA loans.

Click this link if you would like to see: Total SBA loans approved by SBA Sacramento office from October, 2014 to March, 2015.Click this link if you would like to see: SBA loans approved by banks from October, 2014 to March, 2015.Click this link if you would like to see: SBA loans approved by county from October, 2014 to March, 2015.

To get an SBA loan approved is a formal process. There are many forms to complete and you will need to have a good credit score, a good credit history and a downpayment of about 20% of the amount you wish to borrow if you are buying an existing business or franchise with an SBA 7(A) loan.

If the funds are to buy an existing business, the lender will want to see management experience in that industry.

If you own a business and are thinking of selling, one of the steps I take is to get the business pre-approved for an SBA loan. This means I contact SBA lenders, provide background on the performance of the business and they do an analysis to see if the business meets their lending criteria. If it does, they provide a written confirmation. It does not mean the lender will definitely approve a loan but’s its half of the process that is then matched with a buyer when they show an interest to buy the business and wish to get an SBA loan. If you have questions, give me a call on 916 570-2674.

If you wish to buy a piece of real estate with a building you will want to get an SBA 504 loan which requires a downpayment of 10%.

If you have questions about getting an SBA loan to buy a business or sell a business, give me a call on 916 570-2674.

The article SBA loan performance data in 2015 first appeared on Andrew Rogerson and Rogerson Business Services.