By Scott Bossom
The Small Business Administration (SBA), a government agency that works in concert with banks and other lenders,presents important financing opportunities for entrepreneurs and owners of smaller companies. However, it has carried a stigma of being a challenging, time-consuming, bureaucratic process filled with paperwork.
Forsmall-business owners whose time is precious this can be a deterrent. But as a former lender relationship specialist in the SBA’s Portland, Oregon offices – prior to joining Columbia Bank in 2017 to run its SBA lending program in the Northwest – I encourage startup managers and business owners to take a fresh look at the SBA.
I can attest to the fact that the SBA has made important strides in recent years to revamp programs and simplify the loan application process – reducing, for example, the application paperwork down to just one SBA form (in addition to the normal bank application).It also has focused on making it more seamless for its private-sector lending partners to work with increasingly more borrowers to efficiently and flexibly structure lending solutions of varying sizes and types. Small businesses can now get express loans as small as $5,000 with an underwriting period of a few days.This canhelp owners fill small gaps in funding or pay for unexpected but needed investments where previously they may have turned to credits that can be much costlier.
To be sure, it can still be a strenuous process in some cases. No pursuit of a loan is easy. Both government officials and private-sector lenders are obligated to gather necessary customer information to carefully and responsibly underwrite loans. But the SBA process today is hardly onerous in most cases. And working your way through it could very well result in more affordable loans and terms customized to your unique businesssituation.
The potential advantages of an SBA loan could prove the difference between near-term profitability or a long-term uphill climb. In my experience, the more business owners know about the SBA’s offerings, the more likely they are to consider going that route. Demand for SBA loans in the Northwest, for instance, has climbed steadily over the past two years as more lenders move into the space and offer SBA products.
Your bank should be able to help bring you up to speed on SBA options. But it may not always be able to match you with the right SBA product. Regulations put limits on the products and services banks can offer. But a savvy SBA banker should not have to simply turn away customers for which they may not have a solution. In many cases, he or she will have SBA-related connections at alternative lenders such as online lenders, financial technology companies, micro-lenders, and others, who may well be able and interested in underwriting an SBA loan for customers that a bank cannot.
Small businesses are the engines of job creation and economic activity in most markets. More often than not, the oil that lubricates these engines of growth is credit. There is a growing universe of lenders focused on small business lending; they are financing start-ups and providing additional credit as small businesses mature and expand. For many borrowers, the SBA is an important, realistic and affordable option.
I encourage growth-minded small business owners to seek out lenders – banks or otherwise – to study all your options and decide on a credit route once you have concluded which one works best for your needs.
Scott Bossom is senior vice president and manager of Tacoma, Wash.-based Columbia Bank’s Small Business Administration lending program. Bossom is a former lender relationship specialist in the SBA’s office in Portland, Ore.