Seeking funding for any commercial enterprise, whether it be real estate or business expansion, can be a confusing endeavor. There are so many different options that it is hard to know where to begin or to determine which is the best for you. So how do you know if seeking a commercial loan through the Small Business Administration in Texas is right for you?

Knowing what you are getting into before you begin the application process with the Small Business Administration (SBA) is very important, as the application process for a commercial loan is very arduous. The good news is that, if all else fails, you can consult a lender and ask them questions about SBA loans.

One of the ways that the Small Business Administration is able to work with small business owners is by partnering with lenders. The SBA does not directly lend the funds to small businesses, but they work with banks and other lenders to not only find the correct fit for a small business, but also to underwrite a portion of the commercial loan. This takes away a great deal of the risk from the lenders and enables them to be more flexible in their offerings. Because the Federal government is taking on a portion of the risk, lenders are able to grant loans to small businesses and individuals that would otherwise not meet their criteria.

Because of this, however, lenders are the ones to set the interest rate and it might vary from lender to lender. While this can be confusing, if a borrower is organized and detailed oriented, this will not be a problem.

Even still, not all businesses are eligible for a loan through the Small Business Administration. Because of the risk that the government is undertaking, there are additional requirements from the SBA. Lenders might also have a list of requirements (even if they are lowered from a traditional loan). Some of the basic requirements from the Small Business Administration in lending commercial loans are: the business must be “for profit,” the business must be of a certain size, and the business must be able to show that they will be capable of paying back the loan. A much more subjective requirement is that the business must have “reasonable” equity from the owner or partners.

Not every business is able to obtain a loan from the Small Business Administration. For example, even if a small business meets all of the requirements but is a financial institution or a certain type of insurance provider, they are automatically ineligible for any loan through the SBA.

What if I still don’t know if I am eligible to receive a commercial loan from the SBA for my business ventures in Texas?

If you have looked at all of the requirements and still have some confusion about if you are eligible, the best thing to do is to simply ask. It would be an absolute waste of time to go through the extensive process of applying for a commercial loan through the SBA, only to find out that you were not eligible from the start.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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