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Commercial Mortgage And Business Loan - SBA Loan Working Capital
The most problematic commercial mortgage business loan scenarios for many commercial borrowers will be the refinancing of a Small Business Administration loan (SBA loan) or getting the initial SBA loan. Both of these SBA loan problems require a prudent business financing approach, but there are reasonable solutions.
The most problematic commercial mortgage business loan scenarios for many commercial borrowers will be the refinancing of a Small Business Administration loan (SBA loan) or getting the initial SBA loan. Both of these SBA loan problems require a prudent business financing approach, but there are reasonable solutions.
How Difficult Are SBA Loan and Commercial Mortgage Programs?
The prevailing wisdom about buying a business with an SBA loan can be summarized as follows: (1) Commercial borrowers would be wise to avoid an SBA loan. (2) Commercial borrowers would be wise to use an SBA loan. These opposite perspectives are due to a confusing SBA business financing process that is perceived by some business borrowers as too complex.
In reality SBA loan programs are more practical than they often appear. It is critical to the success of an SBA loan program to be working with an SBA loan advisor and lender that is proficient at this difficult commercial mortgage process. There are many potential business loan problems to avoid when attempting to obtain an SBA loan, and very few lenders are skilled in this business financing area.
Is SBA Loan Refinancing Possible?
One of the major drawbacks of an SBA loan has historically been the difficulty of refinancing the SBA business financing later. Recent developments have changed this business loan situation so that it is now more practical to refinance an SBA loan. It is still accurate to say that refinancing is not routinely available, but more importantly it is much easier to obtain than it was in prior years.
The primary SBA loan refinancing problems can be avoided with some advance business loan planning. If it is feasible to arrange the original commercial mortgage without using an SBA loan, subsequent business refinancing will be smoother without SBA loan involvement. Business borrowers should evaluate if an SBA loan is required in the early business financing.
SBA Loan Misunderstandings - The SBA Business Loan Process
One of the prevailing views of an SBA loan program concerns the documentation needed to finish the commercial mortgage requirements. The key to a successful SBA loan process is trusting the SBA loan facilitator about what is required. What business borrowers should try to realize before becoming frustrated by the SBA loan process is that any commercial loan process will include substantial paperwork whether an SBA loan is involved or not.
Beyond the paperwork concerns, a more critical and real problem is working with an SBA lender that is not very good at successfully completing SBA loan requirements. Even though there are many commercial lenders that publicize their ability to process an SBA loan, in reality there are very few lenders nationwide who are consistently successful at completing the SBA loan process in a timely manner.
Alternatives to SBA Loan Financing - Conventional Business Loan Options
The decision to obtain an SBA loan should be evaluated together with conventional commercial mortgage options. The decision made by a business owner when finalizing the acquisition business loan will directly impact the ability to refinance a commercial real estate loan in the future.
A conventional business loan might be more feasible than many borrowers realize. The possibility of refinancing either an SBA loan or conventional business financing will ultimately be more practical and successful when working with a skilled commercial mortgage advisor and commercial lender.
Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.