Posted by: LISC Small Business on February 11, 2016
Mary Los, head of our small business lending, answers our questions and offers some tips for small business owners interested in applying for a loan through LISC's SBA Community Advantage program.
Q: What type of small business is the SBA Community Advantage program most suited for?
A: Almost any for-profit small business could benefit from the Community Advantage program, which allows mission-oriented lenders like LISC to make small business loans to underserved entrepreneurs. Many of our clients are too small for conventional bank financing or may not meet all of a bank’s credit requirements, such as number of years in business or minimum credit score. As a nonprofit lender, our program provides more flexibility in meeting the needs of small businesses. We’ll consider making loans to borrowers with personal credit scores as low as 625, which is typically much lower than a bank’s requirement. And since we make loans from $50,000 to $250,000, we really target those small businesses that are traditionally overlooked by lenders.
Q: What steps can a borrower take before starting an SBA application to expedite the process?
A: Before applying for a loan, business owners should know and understand their financial needs. They should have a specific loan amount in mind and understand how large of a loan they can support based on the down payment they can provide. For our program, we require borrowers with startup companies to put 30% down and those with established companies to put 10% down.
To help speed things along, business owners should prepare documentation in advance, including their business plan and tax returns and review their personal credit reports. The SBA website has great tips for those entrepreneurs who need a little extra help with their business plans and financial reports before submitting a loan application.
Q: In your experience, what is the most common hurdle for a borrower applying for an SBA loan?
A: Applying for an SBA loan can be a daunting process for small business owners, especially first-time borrowers. Since the SBA is a government program, we are required to gather a lot of financial documents, from personal and business tax returns to bank statements. The entire process from application to loan closing usually takes between six to eight weeks. Of course, if a borrower has the necessary documentation ready from the beginning, then things move along more quickly. The process itself is not difficult, but it certainly helps if a business owner is organized! On the plus side, the information that we collect all pertains to your business, which is valuable information to have and will help you better understand your company in the long run.
Interested in learning more? Reach out to us at . To apply for an SBA Community Advantage loan, fill out our online prescreen form and we'll be in touch.