When you apply for an SBA loan – or any loan – your odds of approval depend on a lot of factors. Assuming you have most of the right qualifications (the 5 C’s of credit, etc.), a lot of it depends on the lender you are seeking financing from. Specifically, what is their situation and how likely are they to approve your loan?
Well, the answer is: “It Depends”
It depends on the asset you are looking to finance. Is it a multi-use building that could be used for almost any business or is it a circular fondu restaurant that rotates around a giant fish tank.
Hint: “multi-use” is good.
It depends on whether your banker is an experienced SBA lender or if they just dabble in it. A lot of lenders have “discovered” SBA lending in the last few years and ‘aint exactly great at it. (Experienced = Good/Dabbling = Bad).
It depends on how the banks current portfolio of loans is performing. Does the bank have too high a concentration of one particular type of asset. Maybe you are trying to buy a self storage facility but the bank just had 3 self storage facilities default on their loans.
It depends on the banks capital. How much can the bank actually lend? Will your request be too large for them?
It depends on the banks perception of the health of the economy. Does the bank feel the economy is strong enough in your area to support your business or are they running scared and not actually lending?
It depends on the banks future plans. Are they in it for the long haul or are they positioning themselves to sell? (Either scenario could be good or bad).
It depends on how well the bank came through the carnage of the Recession? Are they still licking their wounds, circling their wagons, covering their as…well, you get the point.
It depends on whether the FDIC is the banks Puppetmaster. Is the banker putting on a good face and telling you that they are lending when in reality they are only lending to those who don’t need it because the FDIC is behind the scenes telling them what they can and cannot do?
My point? Odds are pretty good that since you already have a business to run, you might not be up on all this “dependent” stuff and you might need someone to do the dirty work for you. (Or at least someone with first hand knowledge of which bank is doing what).
So how do you know which SBA lender you can “depend” on…well that depends on who is helping you find that lender. Sorry, couldn’t resist just one more “depends.” (Okay, maybe 2).
Sometimes, there’s an easy solution because you have a business that has been thriving and your local community bank is ready,willing and able to help, but more and more that is not the case and you just might need help finding that lender who is right for you…and that is when you might want to enlist the help of an SBA Wingman 🙂