Getting a loan from the SBA can be extremely beneficial to your business. In order to minimize your time and energy spent on receiving a loan however, it is important to be informed about the different types of lenders that assist you in receiving SBA loans.
The SBA itself does not participate in the lending process to individual business owners. Instead, it has created a network of banks and lenders in your local community that offer SBA loans. These lenders fall into three distinct categories which will turn out to be important in choosing one of the 22,500 lenders associated with the SBA. These lenders are General lenders, CLP lenders, and PLP lenders.
General lenders are licensed SBA lenders who have been proven trustworthy by the SBA. They are the most common lender, with about 21,200 of them in the country.
Most of their financial analysis, including review of your application and historical documents are done through the SBA. Thus many General lenders have a two phase process in which they look at your application. First, they will review your documents in-house to see if you fit the basic criteria for a loan. Should you seem fit, they then apply to the SBA for their backing and approval of the loan. The SBA further reviews your application, and a decision is made depending on whether or not you have met all of the qualifications necessary.
Lenders certified by the SBA are part of the Certified Lender Program (CLP). These lending institutions have been noted as successful by the SBA, and thus are given more direct responsibility and privileges. These responsibilities include all financial analysis to be made before a transaction takes place. Thus, once certified, the SBA plays a much smaller role in the operations of a CLP lender. Furthermore, CLP lenders are given priority processing privileges. This allows for a much faster loan process in comparison to General lenders, saving you valuable time.
There are approximately 850 lenders in the CLP program.
The lenders in the Preferred Lender Program (PLP) have been identified by the SBA as the most successful lending institutions. They are given full power in the decision making process and can grant SBA loans without consulting the SBA first. Having full in-house and final decision capabilities allows PLP lenders to offer borrowers the fastest processing times. Moreover, unlike other SBA lenders they seize your property directly in case of default instead of first applying to the SBA.
Even though there are only 450 SBA recognized PLP lenders, their ability to offer you one to two day processing times makes them worth identifying. Their fast turnaround ability has resulted in PLP lenders, comprising only 2% of SBA lenders, to issue more than 20% of SBA loans!