Last March, the Small Business Administration (SBA) assigned a limit on the agreement it was offering on “goodwill” financing, limiting them to $250,000 or 50% of the total amount of SBA loan, whichever amount was lower. SBA commercial lenders are in general divided into three categories: banks that hold the PLP (Preferred Lender) status through the SBA 2. Banks without the PLP status and 3. Though rare, lenders that are allowed to work with the SBA that do not hold a bank license.
Although this is true that the SBA borrowings are there for the help of small businesses, it is also true that you have to have a good credit history to get approval from SBA If there were some problems with the credit report in the past, then you have to make clear that all these problems have already been sorted out.
Companies wind up in trouble and squander the time, talent and energy of their workforce when they lose focus, spend money on things that don’t make a difference to employees or the future of the business, and use operating models that are out of whack.
The focal point of corporate governance within small businesses is that all businesses need to set company strategic goals, provide the leadership to put them into effect, supervise the management of the business, and if the company has stockholders, report to the stockholders on their stewardship.
Translation: banks are comfortable with the new SBA (as opposed to the more insular and contentious regime under the Bush administrations that spent more time fighting and failing to communicate with lenders than trying to treat them as partners) and so more willing to make loans even though the default rates go higher.