SBA Lending: Managing The Risk To Achieve The Reward

Jay Lucas

Director of Credit Services

January 15, 2018

As Seen in Alabama Bank News, January, 2018

The relationship between small businesses and local financial institutions is a vital component of a healthy modern economy. Institutions fund local businesses that in turn, employ local workers, sell goods to local consumers, and if they are successful, apply for additional loans to purchase new equipment or larger commercial space.

While most banks’ preference is to fund local business loans themselves, in some cases, a bank’s product offerings may not provide the right fit. In that case, there is another option available: The U.S. Small Business Administration, also known as the SBA. Since this federal guarantee program often provides more flexibility for the borrower, it allows community banks to approve loans that might otherwise have been denied based on the bank’s traditional loan policy — essentially providing small businesses with much needed working capital that otherwise would not be available to them.

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