An SBA non-bank lender is a financial institution that does not accept customer deposits. Their sole reason for existing is to lend money to eligible small businesses in their community.
On the other hand, a bank is a financial institution that solicits monetary deposits from their customers and in turn loans these funds to other customers such as individuals and businesses seeking capital for a variety of reasons including starting or expanding a business.
Banks solicit deposits from their customers for two reasons: Number one to meet the Federal Reserve’s capital reserve requirements to ensure satisfactory liquidity levels and number two because deposited funds in a demand deposit account, or what is commonly referred to as a checking account, are the lowest cost of funds.
Due to increased government regulatory oversight it is typically more difficult to qualify for a small business loan from a traditional bank than it is from an SBA non-bank lender.
Therefore, seeking capital from an SBA non-bank lender may be to your advantage due to the fact that non-bank lenders typically possess less stringent underwriting guidelines and do not require you to move your deposit relationship to them; which is time consuming and sometimes undesirable if you particularly like your depository institution.
If you’ve been rejected by a traditional bank and would like to be introduced to an SBA non-bank lender give us a call at 858-762-2774.
My SBA Loan Pro
The My SBA Loan Pro Podcast is hosted by Your SBA Loan Pro, Ryan Smith. In each episode Ryan provides valuable information and best practices regarding the SBA loan program.
Each episode is approximately one minute in length and addresses topics related specifically to SBA 7(a) and 504 loan programs to purchase real estate, acquire a business or franchise and obtain working capital.
You’re encouraged to listen and subscribe to ensure you’re notified each time a new episode is available. Ryan publishes a new episode weekly on Tuesday mornings, unless he’s kidnapped to a deserted island of course.