| SBA commercial lenders are mostly banks that | | | | Lender) status through the SBA 2. Banks without the |
| receive a guarantee from the Small Business | | | | PLP status and 3. Though rare, lenders that are |
| Administration, that in case of borrower default, the | | | | allowed to work with the SBA that do not hold a bank |
| bank will receive the bulk of their capital back. With | | | | license. Some of these lenders hold the PLP status |
| SBA 7a loans the guaranteed portion of the loan | | | | as well. |
| balance is 75%. On SBA 504 loans the guaranteed | | | | In general borrowers should consider working with PLP |
| portion is on the second lien position piece which is | | | | lenders or banks rather than institution that do not hold |
| whatever the loan balance is higher than 50%. In | | | | this designation. The status is earned and awarded |
| other words if the total loan to value is 90%, 40% of | | | | by the SBA to banks that continuously meet quantity |
| the loan would be guaranteed for the bank. | | | | and quality agendas set by the SBA. Borrowers can |
| The importance of this for the borrower is that | | | | feel assured that if they are working with a PLP lender |
| because of the assurance the funding bank receives | | | | that the bank knows what they are doing. |
| from the Small Business Administration they are able | | | | Another major benefit of working with a PLP lender is |
| to offer more aggressive loans than would be | | | | the file only has to be underwritten once by the bank. |
| possible. For example it is common for the SBA to | | | | The SBA basically just rubber stamps their approvals |
| offer 90% financing on purchases. And via the 7a | | | | and provides the guarantee. In contrast with non PLP |
| program is possible to get 85% financing on | | | | banks the file has to be underwritten twice. Once by |
| refinances. In comparison, conventional bank loans | | | | the funding bank and then again by the SBA. This is |
| are often capped at 70% -75% on purchases or | | | | where those horror stories of the 6 months to close |
| refinances. | | | | come from. |
| SBA Commercial Lenders | | | | In general owner occupants should take a very hard |
| Also banks that work with the SBA will consider many | | | | look at what the SBA loans have to offer as there |
| special use properties that a lot of banks will not. For | | | | can be some of the best terms available. Also, |
| example car washes, restaurants or motels are three | | | | borrowers should keep in mind that not all SBA |
| good example of building types that many non SBA | | | | programs or banks are the same. There can be a |
| banks won’t even look at. | | | | big difference in what is offered and what the |
| SBA commercial lenders are in general divided into | | | | underwriting guidelines are between one SBA lender |
| three categories: banks that hold the PLP (Preferred | | | | and the other. |