The SBA Loan Program offers loans to help small businesses. While the loans are guaranteed by the U.S. Small Business Administration, they are issued by a traditional lender, such as a bank. These loans can offer more flexibility and lower interest rates compared to other lending options, making them a good way to help finance your business. However, they require very different procedures than what is expected in a traditional loan or mortgage. This is where you can gain insight and assistance from a MOWK Law attorney who is well acquainted with SBA loans. Read on to learn about the SBA program, and how our attorneys can help borrowers navigate the process.
What is the SBA Loan Program?
The SBA loan program is a government small business loan that isn’t funded directly by the Small Business Administration, but it is backed by the federal government and issued by a private lender.
A borrower applies for an SBA loan through a lending institution, such as a bank or credit union. Next, that lender applies to the SBA for a loan guarantee. This means that the SBA will repay a part of the loan if the business defaults on payments. Additionally, the Small Business Administration requires an unconditional personal guarantee from everyone with at least 20% ownership in the company. This puts you and your assets up for grabs for payment if your business can’t make them.
Why Hire a Lawyer for the SBA Loan Process?
When you’re preoccupied with the daily demands of running your business, it is difficult to navigate the loan process. A good way for borrowers to have a positive loan experience is by working with a knowledgeable commercial attorney. Not only can you benefit from a successful outcome, but you can also benefit from a lawyer’s guidance at different phases and to assist with various tasks, including:
- Loan Requirements and Qualifications: There are various types of SBA loans – each with its own terms and requirements. The kind of loan that works best for is determined by what you want to use the money for. This is where our Mowk Law attorneys can help; they can match you up with loan that is most appropriate for your particular situation.
- Due Diligence Issues: Part of the process includes providing necessary due diligence to the lender. You want to ensure that you’re meeting all of the requirements and consulting with an attorney can help with this. For example, they can provide insight about the appropriate entities to form and can draft accompanying documents such as operating agreements and leases. In general, your lawyer can inform you of all the details of your transactions, including your rights, responsibilities, and risks.
- Loan Closing: It can be beneficial when a borrower is represented by a lawyer when the closing actually occurs. They can review the loan documents and go over them with the borrower and provide copies of all executed transactional documents required by the lender from the closing.
Talk to an Experienced Lawyer about SBA Loans
It can be challenging to navigate the SBA loan process. However, you don’t want to lose valuable time to apply and then receive these significant funds to help operate your small business. You may find the process intimidating, but don’t underestimate how much a skilled lawyer can help. Our MOWK Law attorneys are ready and willing to assist you with taking advantage of your available legal options. Contact us today for more information.