If you’re a small business lender, chances are you’ve come across entrepreneurs with potential who simply don’t qualify for loans with your bank or lending institution. Without an alternative option available, these business owners may turn to a competitor or a high-cost online lender for the financing they need, closing the door on current and future relationships with your institution.
Offering SBA loan products provides a worthwhile alternative for small business owners like these and a way for you, as a lender, to keep the door open. Learn more about how implementing an SBA loan program can lead to higher profits and more satisfied customers.
SBA guaranteed lending: the basics
All loan programs through the SBA are guaranteed, meaning you’re able to manage your financial risk while offering your borrowers more flexible terms. Becoming an SBA lender also gives you opportunities to expand your product offerings and to cultivate relationships with new and longstanding customers.
SBA loan programs make it possible for you to lend when there’s a collateral shortfall, when longer maturities are needed to improve cash flow, or a myriad of other reasons. Loan proceeds can be used for a variety of purposes, including: business start-ups or acquisitions; working capital; expansion; equipment; real estate purchases and the refinancing of existing debt.
Why offer SBA loan programs?
Increase Customer Loyalty and Retention
Saying “no” to a loan request may mean waving goodbye to your customer’s business entirely. Unfortunately, we’ve all had customers who took their deposit relationships elsewhere after being declined for a loan (or who went to a competitor and got approved). By offering an alternative when conventional financing isn’t feasible, you can become or remain your customer’s go-to institution for business financial needs. It’s a win-win for you and your clients.
Receive SBA Credit Enhancement
The SBA’s guarantee provides a credit enhancement, allowing you to capture and close loans that may fall outside your current credit box or are considered “too risky” for financing otherwise. Your customers benefit from favorable rates, lower down payments and longer repayment terms. You benefit from minimal risk and maximum returns on each loan you make. The SBA guarantee makes this, and much more, possible.
Help Communities Thrive and Grow
We’ve heard it time and time again—small businesses are the backbone of our communities. As small business lenders, we know it’s true. And by utilizing SBA loan programs to increase access to capital for small businesses, you’re directly investing in local economies and job creation.
For smaller lending institutions, the SBA guarantee means an expanded legal lending limit; only the unguaranteed portion of an SBA loan is counted against it. This allows you to expand the number of clients you serve and to make a positive impact on your community.
Grow Your Portfolio and Increase Your Profitability
Offering a wider array of loan products is a benefit for your sales team and your institution-at-large. Not to mention your borrowers. Your customers have more options for financing because you have added resources at your disposal. With an expanded toolbox you can increase loan volume, market share and profitability. And by selling loans on the secondary market you can also bolster your institution’s fee income and develop your portfolio more rapidly.
Want to get up-and-running with the SBA?
SBA loan programs equip you to meet your borrowers’ complex needs while ensuring your institution greater asset soundness, growth potential and profitability. And, Prudent Lenders makes it possible to get up-and-running quickly and without the cost and hassle of launching an in-house SBA lending department. Contact us today to learn more about how we partner with banks, credit unions and other financial institutions to make SBA lending not only possible, but easy.