With traditional employment losing popularity and the increased interest in entrepreneurship, more people take the leap to start a small business. However, low-dollar loans have not been easy to obtain, especially in underserved communities. Not until now. While small business owners still have to meet loan qualifying criteria, the government has made some key changes to the loan application and approval process, which will streamline some of the requirements banks use to grant SBA-backed loans.
Here are the changes you should know as a small business owner:
1. Removal of the cash flow analysis:
Provided that small business owners meet the lending agency’s credit standards, starting from July 1, lenders will no longer perform an analysis of cash flow on loans of $350, 000 or less. Removing this requirement from the loan application and approval process is expected to reduce the overall time of accessing loan funds in almost half.
2. Elimination of debt service coverage analysis:
Based on small business owners meeting the same credit standards, lenders will also stop performing analysis on debt service coverage on loans of $350,00 or less starting from July 1. Eliminating this requirement from the loan process will also make it twice as fast to obtain loan funds.
3. Introducing of a new electronic platform for loan processing:
Though this change is not expected to be implemented until early next year, small business owners can say good-bye to a 321-page manual for program guidelines on originating and closing loans. The new electronic platform will streamline the loan approval process by allowing the easy submission of electronic signatures and storage of loan documents online.
If you are a small business owner considering applying for a loan, this is certainly great news. All changes in regulation, however—even the good ones—could be confusing and overwhelming to follow while launching and running a business. If you need significant relief and assistance in going through the loan process, contact us for support and specific guidance on following the new process. I have helped numerous small business startups choose the right processes for their business while allowing the business owners to retain full control of their financial assets. Contact Leonard Shostak via the site contact form or at 212-937-7911.