Frequently Asked Questions
Why should I use an SBA loan?
The SBA loan program can help qualified businesses obtain financing that might not otherwise qualify for a conventional bank loan. An SBA loan offers longer terms and in some cases a lower down payment which helps preserve working capital.
What types of businesses qualify for SBA loans?
Most for-profit small businesses are eligible for an SBA guaranteed loan. The most frequently used industries and criteria are:
- Most retail and service businesses with 3 year average sales up to $6.5 million
- Wholesale businesses with up to 100 employees, regardless of sales volume
- Manufacturers with up to 500 employees, depending on the industry, regardless of sales volume
How long will the entire process take?
Processing time depends primarily on the transaction type and the completeness of the application. A commercial real estate purchase will generally take up to 60 days because it requires an appraisal, etc. However, a loan that is not as complex could close in 30 days. As a Preferred Lender, SBA has authorized Premier Valley Bank to make most of the lending decisions. Typically an applicant can be pre-qualified by one of our experienced officers within a couple days, full credit approval is usually determined within a couple weeks.
What is SBA's role in the loan process?
The U.S. Small Business Administration (SBA) is a government agency that guarantees to lenders up to 85% of a loan made to qualified small businesses. The SBA's relationship is with the lender and is basically transparent to the borrower. Premier Valley Bank has been designated by the SBA as a Preferred Lender, which means they have delegated the authority to approve and process the entire loan without having to wait for SBA to review and approve. Loans are approved and funded directly by Premier Valley Bank and the borrower only deals with Premier Valley Bank for the entire term of the loan.
What documentation will be required to get the loan started?
In addition to the Business Loan Application and Management Profile forms, you should also provide personal financial statements for all owners with 20% or more business ownership, a year-to-date business financial statement, 3 years tax returns for both business and personal, plus a summary of the loan proceeds. Additional documents may be necessary depending on the nature of the transaction, talking with one of our specialists' can quickly determine project specific items.
What collateral is required for an SBA loan?
We will generally look first to the business assets for collateral and, should that be insufficient, then we will look at the owner's personal assets to help collateralize the loan.
What is an SBA Preferred Lender?
The U.S. Small Business Administration delegates the credit decision and most servicing and liquidation responsibility to these carefully selected lenders. The Preferred Lender Program (PLP) delegated authority is reserved for the most experienced and qualified lenders.