Two of the most difficult business loan and commercial mortgage situations for a business owner involve obtaining a Small Business Administration loan (SBA loan) and refinancing an SBA loan. There are practical business financing solutions for both of these common SBA loan problems. How Difficult Are SBA Loan and Commercial Mortgage Programs? There are two very different perspectives about trying to buy a business by using an SBA loan and commercial mortgage: (1) Use an SBA loan if it is practical to do so. (2) Avoid an SBA loan whenever possible. These viewpoints are in extreme disagreement because of an SBA loan process that many borrowers view as excessively difficult. Despite the negative atmosphere surrounding the SBA loan process, it can be worth the time and effort for many borrowers. There are critical business financing and commercial real estate loan obstacles to avoid with an SBA loan, and there is only a small number of capable lenders in this demanding commercial mortgage and working capital area. It is vital for a successful SBA loan program to involve an SBA loan advisor that is skilled at this rigorous business loan system. Is SBA Loan Refinancing Possible? One of the major drawbacks of an SBA loan has historically been the difficulty of refinancing the SBA business financing later. Recent developments have changed this business loan situation so that it is now more practical to refinance an SBA loan. It is still accurate to say that refinancing is not routinely available, but more importantly it is much easier to obtain than it was in prior years. The primary SBA loan refinancing problems can be avoided with some advance business loan planning. If it is feasible to arrange the original commercial mortgage without using an SBA loan, subsequent business refinancing will be smoother without SBA loan involvement. Business borrowers should evaluate if an SBA loan is required in the early business financing. SBA Loan Misunderstandings - The SBA Business Loan Process One of the most frequent criticisms of an SBA loan program is the amount of paperwork required to complete the business loan process. What many commercial borrowers fail to understand is that any business financing process is likely to involve substantial paperwork and formal documentation requirements. In the end the key is working with an SBA loan advisor that understands what is required and can facilitate the submission procedures. A much more critical issue that should be a real concern for commercial borrowers is that there are not many commercial lenders who are routinely effective at finishing the SBA loan process with timely and successful results. This can create a harsh reality of working with an SBA lender that is ineffective at successfully finalizing requirements for an SBA loan. SBA Loan Choices and Conventional Business Financing Conventional business financing options should always be considered simultaneously with the possibility of obtaining an SBA loan. As noted above, the feasibility of refinancing a business loan in the future will depend heavily on the choices made by a commercial borrower when obtaining the initial commercial mortgage. Refinancing an SBA loan or conventional business loan will usually be more effective when using an experienced and successful SBA loan - business financing advisor and lender. Commercial borrowers should not overlook the feasibility of traditional commercial mortgage options. Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.
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