The process of securing an SBA 7(a) loan begins with a step that sets the foundation for everything that follows: choosing the right lender. This decision is vital, as it affects the speed and efficiency of the loan process.
Choosing a lender goes beyond obtaining funding. It forms a partnership that can significantly influence the loan application process. The ideal lender is not just a financial institution, but a partner that offers guidance and support throughout the loan process. They should have a thorough understanding of the business’s needs and the complexities of SBA loan requirements.
Additionally, it’s important to deal with the right person within the lender. The loan will move between different departments at the lender over the course of the loan process, generally from the loan origination department to the underwriting department, then finally to the closing department. A good Business Development Officer (BDO)/loan originator won’t move on as soon as they pass the loan off to the underwriting department, but instead will stay involved throughout the loan process and help with any issues that arise.
The Three Ways to Find a Lender
When looking for a lender, it can be difficult to know where to start. To find the lender that’s right for you, there are three main avenues you can take:
1. Personal Research
Personal research could include online research or asking your professional network for recommendations. This could be a good option if you have trusted business connections who can recommend a good lender, or if you’re looking to do everything yourself. However, this method can be more time- and energy- intensive, as it involves researching and personally contacting lenders. Additionally, it can have a lower rate of success, as it lacks the skill and connections of a lender matching tool or broker.
2. Lender Matching Tools
Online lender matching tools are valuable resources in finding a good lender. These platforms use your business information and desired loan terms to match you with high-quality lenders that would be a good fit. This method is a good all-around option for finding a lender, as it utilizes connections in the industry and takes less time and energy than personal research.
3. Loan Broker
When it comes to finding an SBA 7(a) loan, SBA loan brokers are the most hands-on and helpful option. They have extensive experience and connections and are experts at helping borrowers find SBA 7(a) lenders. Additionally, make sure you choose a good broker who’s skilled and easy to work with – you’re paying them to make finding a lender easier, not harder. A loan broker is an especially good option if your loan is difficult to make work, as their expertise in finding a suitable lender will come in handy. Loan brokers generally get paid by the lender, so despite the hands-on effort there is no cost to the borrower.
Which one should you pick?
The best method of choosing a lender will differ based on you and your particular loan. If you have strong professional connections who can refer you to a good lender or want to do everything yourself, personal research may be the way to go. If you’re looking to quickly be matched with a good lender, then a lender matching tool may be the best option. If you want an expert to help you find the best possible lender, then you may want to opt for a loan broker.
7aSavvy is a new tool to help borrowers find loans, with the ease and speed of a lender matching tool and the experience and connections of a loan broker. If that sounds appealing to you, we would love to help you find a good lender. Simply fill out our Get Connected form and we’ll use our SBA loan experience and industry connections to match you with a top-quality lender who’s a good fit for your loan!
Tips for Finding a Good Lender
Having the right lender is important, so here are some tips to help you find a good one for your SBA 7(a) loan:
• SBA Experience is Key
Stick to lenders with extensive SBA 7(a) loan experience, as it’ll lead to a quicker and smoother loan experience. The SBA loan process isn’t fundamentally different from that of a conventional loan, but it does have more detailed requirements and extensive documentation. This means it can confuse and slow down lenders who aren’t experienced with SBA loans.
• Seek Industry-Specific Experience
Lenders that have experience with your industry will understand the business and loan better, which can lead to a quicker and smoother loan process. Additionally, it gives the lender the ability to provide more relevant advice and support throughout the loan process.
• You’re Choosing a Partner, Not Just a Lender
You’re not just choosing a lender, you’re also choosing a partner who you’ll be working with throughout the loan process. Pick a lender that you feel you can work with, be communicative with, and trust.
