Lending and borrowing small business loans becomes easier

Small business loans are about to become more streamlined for lenders and accessible to borrowers, says the U.S. Small Business Administration.

As part of an initiative to make the organization more goal-oriented and accountable to customers, the SBA sought feedback from its district offices and lending partners on ways to improve services. The result is a loan reform initiative that will increase agency’s outreach to clients in underserved markets, enhance its relationship with lending partners and strengthen its ability to help small businesses start and grow.

"The immediate impact for small businesses will be felt through their dealings with the lenders," said Stephen Hart, senior area manager for the SBA in Southern Arizona.

There are four distinct components of the initiative:

» A new, more lender-friendly standard operating procedure that is shorter and better organized. The document is targeted for introduction in early spring.

» A new 10-tab system for submitting purchase guaranties as an alternative to the present 45-tab format. SBA’s tab system helps lenders organize their loan purchase packages by breaking down the sets of documents necessary into the current 45 sections. The 10-tab system offers a reduced number of documented categories and a more intuitive flow, which should help improve package quality.

» Every lender that submits a new, complete loan package using the 10-tab format to its National Guaranty Purchase Center after Nov. 1 will be informed in 45 days or less whether it will be purchased, or is likely to end in a repair or denial. It will often be far less than 45 days, says Hart, who said many banks are using a system with SBA called e-Trans that can get an approval in a matter of hours.

» A new program called Rural Lender Advantage, a simpler loan approval process designed to spur economic growth in rural communities. The SBA is encouraging smaller, rural lenders to partner with SBA by requiring less paperwork, offering services online, and providing greater lender support.

The agency also intends to simplify its Community Express loan program. This program has the highest minority participation of any SBA lending product.

"Our goal is to get the capital and the advice into the hands of the small business entrepreneur," Hart said. "These changes help make that possible."

Source : http://www.azbiz.com