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Loans guaranteed by the Small Business Administration (SBA) are a valuable source of capital for many growing businesses. Small business lending software can now incorporate automated underwriting to make their SBA lending faster, more customer-friendly and more profitable than ever before.[/vc_column_text][vc_single_image image=”8630″ img_size=”large” alignment=”center” css_animation=”none”][vc_column_text]

A brief overview of SBA lending

The U.S. Small Business Administration works with banks and other lenders to provide loans to small businesses, ranging from as little as $500 up to $5.5 million. In general, there are four requirements that a small business must meet to qualify for an SBA-guaranteed loan:

In addition, there are a number of specific requirements for each type of loan and borrower. SBA lenders also have their own requirements. This is why the SBA recommends that businesses consult with lenders before applying for SBA loans.

There are three basic types of SBA loans. 7a loans are the most popular and can be as high as $5 million. For loan amounts below $150,000, the SBA guarantees 85 percent of the loan amount. For loans larger than $150,000 and up to $5 million, the SBA guarantees 75 percent of the loan amount.

Besides 7a loans, the SBA also offers a capital line of credit for exporters and the 504 loan, which is used specifically for real estate or machinery and equipment purchases.[/vc_column_text][vc_single_image image=”8628″ img_size=”large” alignment=”center” css_animation=”none”][vc_column_text]

How SBA requirements affect the underwriting process

The SBA requirements for small business loans affect the underwriting process in two ways. First, because SBA loan applicants must exhaust all other possible funding sources, many customers have poor or little credit history. This makes underwriting more challenging.

Secondly, the SBA imposes a number of additional documentation requirements, which vary with the type of loan. There are 17 main requirements for SBA loans, some of which involve multiple documents.

For example, a borrower must submit three years of personal and business tax returns, resumes of all business principals, and detailed descriptions of both the purpose of the funds and the use of the owner’s equity injection.

Managing this array of paperwork can be frustrating and time-consuming for both the borrower and the lender. This is why for many small businesses, automating the underwriting process is an attractive option.

[/vc_column_text][/vc_column][vc_column][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_custom_heading text=”Request MonJa’s Underwriting Automation Demo For SBA Loans” font_container=”tag:h4|font_size:25|text_align:left” google_fonts=”font_family:Raleway%3A100%2C200%2C300%2Cregular%2C500%2C600%2C700%2C800%2C900|font_style:700%20bold%20regular%3A700%3Anormal”][vc_custom_heading text=”MonJa Underwriting Automation Software is a great fit for small and medium-size financial institutions.” font_container=”tag:p|font_size:20|text_align:left|color:%23000000″ google_fonts=”font_family:Raleway%3A100%2C200%2C300%2Cregular%2C500%2C600%2C700%2C800%2C900|font_style:700%20bold%20regular%3A700%3Anormal” css_animation=”none”][/vc_column][vc_column width=”1/2″][vc_column_text][yikes-mailchimp form=”10″ submit=”Request Demo”][/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

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Automated underwriting enhances SBA procedures

Automated underwriting, also offered by MonJa, is ideal for managing the complexity of SBA guaranteed loans. With the right software, a lender can process small business loans more efficiently, turning what was once an unattractive part of the lending business into a valuable profit center.

Check out MonJa’s underwriting solutions for financial institutions here, for lenders – here.

Some features of automated underwriting solutions include:

With the right small business lending software, serving borrowers of small loans is transformed from a low-return, time-consuming business into an efficient and profitable one.[/vc_column_text][/vc_column][/vc_row]

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