Small Business Administration (SBA) loan programs are an excellent way to obtain liquidity and grow your business. They avoid the fees and high rates of unsecured loans, and they often offer higher advance rates and extended repayment schedules than conventional business loans.
The SBA delegates authority to certain organizations, lenders, and financial institutions, like First American Bank, to make final credit decisions without prior review and approval from the SBA. This makes for faster loan approvals and happy borrowers.
Types of SBA Lender Programs
The SBA has created two categories of lender programs: the Preferred Lender Program (PLP) and the General Program (GP). Both programs allow lenders to originate SBA loans; however, GP lenders have a much more challenging time approving their own SBA loans.
For example, GP lenders must submit their loan applications to the SBA for final approval. Once submitted, the SBA will thoroughly review the application and its associated documents. This review is to ensure it is compliant with the SBA’s rules and regulations found in their standard operating procedure. If the loan application fails its compliance check, it is returned to the GP lender with a series of questions that must be addressed before it can be submitted again for approval. Depending on the complexity of the loan, this back-and-forth can cause significant delays, or can result in the SBA outright denying the loan application. PLP lenders, on the other hand, can leverage their experience and expertise to decide whether a loan application complies without submitting the loan request for review. PLP lenders like First American Bank provide final approval on behalf of the SBA, thereby expediting the entire loan application process.
Understanding the PLP Designation
Not just any lender can earn a PLP designation. Lenders must meet certain requirements and undergo a demanding and rigorous approval process. This autonomy is only granted to lenders who have a proven track record based on years of experience, performance, and sound risk management practices. This is why it is so important to have an experienced and trusted strategic partner, one who can provide advice and guidance based on the real needs of the business.
At First American Bank, we pride ourselves on having the highest level of delegated authority by being an accredited PLP lender. We can originate any loan product found under the SBA 7(a) and SBA 504 programs. We are able to provide greater flexibility, faster turnaround, and a better customer experience. First American Bank has over two decades of experience working with SBA loans. We look forward to working closely with every one of our clients to determine which SBA program is best suited for their specific needs.
