After facing criticism in the last few years, the Small Business Administration (SBA) is ramping up its efforts to make getting loans for businesses easier than ever. The new SBA administrator Maria Contras-Sweet has rolled out these new initiatives to reduce the amount of red tape and time it takes to get a loan.
Here are some recent changes to the SBA and the ways business owners can utilize them:
The LINC tool
The Leveraging Information and Networks to access Capital (LINC) tool is a system in SBA.gov that can help pair small-businesses with SBA lenders. Borrowers can fill out a simple 20 question application about their business and it will get sent to a pool of participating lenders. If the application matches the lender’s preferences the borrower will be contacted within 2 days.
Currently, business owners seeking a Community Advantage Loan (loans of $250,000 or less from non-profit lenders) or a 504 Loan (for real estate or equipment) can utilize this system to connect with over 130 lenders nationwide. In addition, the SBA has plans to expand the LINC tool for more generalized loans in the future.
The SBA One is an automated system that lenders can use to submit loan applications to the SBA for a guarantee. Business owners and lenders can take advantage of the faster time it will take for the SBA to back a loan. The program is expected to be released in April of this year.
SBA credit scoring
The SBA recently implemented their own credit scoring model called the FICO SBSS score to make the loan approval process easier for both lenders and borrowers. A large part of loan approvals relies on this score, which combines both personal FICO credit scores and Dun and Bradstreet Paydex business credit scores. Before this the SBA considered both separately.
Business owners can get approved for the best loans and rates by staying on top of both their business and personal credit. It’s also important to consider all the factors that SBA lenders look at before you apply for a loan. On the other hand, having poor/limited scores for either will greatly reduce any opportunities with the SBA. Borrowers can also take advantage of a reputable credit restoration company if they have poor credit. This can cause credit improvement in as little as 7-50 days and allow owners to apply for the best loans after the process.