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Commercial Mortgage and Business Loan - SBA Loan Working Capital

Two of the most difficult business loan and commercial mortgage situations for a business owner involve obtaining a Small Business Administration loan (SBA loan) and refinancing an SBA loan. There are practical business financing solutions for both of these common SBA loan problems.

Are SBA Loan and Business Financing Programs Difficult?

The prevailing wisdom about buying a business with an SBA loan can be summarized as follows: (1) Commercial borrowers would be wise to avoid an SBA loan. (2) Commercial borrowers would be wise to use an SBA loan. These opposite perspectives are due to a confusing SBA business financing process that is perceived by some business borrowers as too complex.

For most borrowers the SBA loan programs will be more effective than suggested by many prevailing negative comments. It is absolutely essential to be working with an SBA loan source that is capable of performing within the complex business financing process for an SBA loan. In reality there are very few commercial lenders which are consistently successful in this business loan area, and there are numerous commercial mortgage and commercial loan difficulties to avoid when obtaining an SBA loan.

Is SBA Loan Refinancing Possible?

One of the major drawbacks of an SBA loan has historically been the difficulty of refinancing the SBA business financing later. Recent developments have changed this business loan situation so that it is now more practical to refinance an SBA loan. It is still accurate to say that refinancing is not routinely available, but more importantly it is much easier to obtain than it was in prior years.

The primary SBA loan refinancing problems can be avoided with some advance business loan planning. If it is feasible to arrange the original commercial mortgage without using an SBA loan, subsequent business refinancing will be smoother without SBA loan involvement. Business borrowers should evaluate if an SBA loan is required in the early business financing.

Obtaining an SBA Loan - Two Common Business Financing Misunderstandings

One of the prevailing views of an SBA loan program concerns the documentation needed to finish the commercial mortgage requirements. The key to a successful SBA loan process is trusting the SBA loan facilitator about what is required. What business borrowers should try to realize before becoming frustrated by the SBA loan process is that any commercial loan process will include substantial paperwork whether an SBA loan is involved or not.

A much more critical issue that should be a real concern for commercial borrowers is that there are not many commercial lenders who are routinely effective at finishing the SBA loan process with timely and successful results. This can create a harsh reality of working with an SBA lender that is ineffective at successfully finalizing requirements for an SBA loan.

SBA Loan Choices and Conventional Business Financing

The decision to obtain an SBA loan should be evaluated together with conventional commercial mortgage options. The decision made by a business owner when finalizing the acquisition business loan will directly impact the ability to refinance a commercial real estate loan in the future.

A conventional business loan might be more feasible than many borrowers realize. The possibility of refinancing either an SBA loan or conventional business financing will ultimately be more practical and successful when working with a skilled commercial mortgage advisor and commercial lender.

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