What Delays the Process?
The following issues can slow down or stop the approval process.
1. Amount of Life insurance on borrowers not stipulated. SBA requires life insurance. The amount per SBA guidelines in the full amount of the loan, however, lesser amounts can be approved taking into account such issues as collateral, number of owners and their participation in the business, etc.
2. Stale dated financial statements. ALL financial statements (business and personal) can be no more than 90 days old at the date of submission.
3. Forms not signed and dated. In particular, tax returns and business financial statements are often not signed and dated.
4. Non US Citizen - Permanent Resident Aliens are eligible for SBA financing, but must complete additional forms (G-845) which has to be submitted to Homeland Security for clearance. This can slow the process as this has to be obtained before the loan can be submitted to SBA for approval. Let us know as soon as possible to get this part of the processing underway.
5. Notes to be Re-financed - If part or all of the loan is to re-finance existing debt, there are eligibility guidelines to be met. Call and we can forward these to you or discuss with you. The borrower MUST provide a copy of the note that is being re-financed.
6. Lack of Global Cash Flow - Particularly when there are multiple operating companies, SBA will look for and require a global cash flow as part of your underwriting.
7. Banks cannot charge an origination fee. However, secondary market premiums are very attractive and improve the profitability of the loan as well as maximizing the bank's capital.
8. It is always best to use the SBA Personal Financial Statement (see Forms tab) - Form 413. Spouses must sign the PFS, even if they are not guaranteeing the loan.