SBA Loan Disadvantages

When you are ready to apply for an SBA loan, please click on the link, and enter your contact information.  You can then submit your SBA loan to over 100 different SBA lenders.

SBA loans do have some disadvantages:

• SBA loans take a few extra weeks to process, compared to a conventional commercial mortgage loan; but the process is actually surprisingly fast when you consider that the government is involved.
• SBA lenders will often take additonal collateral, like your inventory, receivables, equipment, and home.  Once you have an SBA loan, you are pretty much tied up in terms of collateral that you can offer another lender.
• SBA loans have prepayment penalties.  The 7a loan has a declining prepayment penalty of 3% in year one, 2% in year two, 1% in year three, and none therefter.  The 504 program forbids the conventional lender from charging a prepayment penalty on the underlying first mortgage; but the SBA-guaranteed second mortgage has an immense prepayment penalty of 10% in year one, 9% in year two, etc.  There is no prepayment penalty in year eleven.