Fortunately, the government has taken the advice of leading economists and made some changes to SBA loan requirements. These changes have opened the door to funding for many businesses that might not have qualified for a loan in years past. In early 2014, the SBA made an announcement regarding changes to its application process to help streamline lending and improve oversight. In an effort to create jobs in a strengthening economy, the reduction in paperwork was seen as a way to expand upon the number of entities eligible to apply for an SBA loan.
One of the significant changes to Small Business Administration loans was the removal of the personal resource test. For 7(a) and 504 loans through the SBA, borrowers would no longer need to provide a certain amount of personal finance resources. The loan process used to have a complex set of rules that determined the amount of collateral required.
Lots Of Guidelines Changes For Small Business Administration Loans
Another change to the application process that was designed to increase the number of businesses eligible to apply for 504 loans was the elimination of the nine-month rule. This rule required businesses to list 504 project expenses for the nine months preceding the loan application. By making more businesses eligible for SBA loans, businesses would be free to explore commercial loan rates from many additional lenders.
With the changes to the application process for small business loans, businesses could include all expenses incurred at any time. This change would help businesses who had to put projects on hold because of events like natural disasters qualify for Small Business Administration loans.
Further, the SBA made changes to the rules surrounding the maximum size of a company based upon that business's relationship to other companies. The SBA established size standards for businesses that included affiliate relationships and subsidiaries. Traditionally, SBA loan rates and eligibility have been based upon characteristics of the industry in which a business operates.
Small Business Administration Loans Became Easier To Apply For...
One of the changes the SBA made to the list of which businesses could apply for Small Business Administration loans was an increase of the size standards for 209 different industries. Some businesses were eligible for waivers of some rules, but the change in sizing requirements allowed the government to do away with these complex exceptions and simplify eligibility.
Another change made in the past few years by the SBA was the increase of maximum loan size available for SBA loans. The Small Business Jobs Act permanently increased the maximum loan sizes for the SBA 7(a) program, as well as for the 504 CDC program, the Micro-loans program, and various international loan types.
A commercial mortgage is often much larger than a residential mortgage, and the increased maximum loan sizes have allowed more businesses to take a chance with significant properties funded by Small Business Administration loans. The 7(a) and 504 limits were increased from a maximum of two million to five million.
With the revised rules and regulations surrounding an SBA loan application, today's small businesses have been given the chance to expand, improve, and enhance the size and scope of facilities. Small business owners who apply for today's SBA loans will even enjoy fee relief on loans of $150,000 or less with a recent announcement that the SBA would sustain current fee relief for small loans. Investigating Small Business Administration loans is a vital step for gaining funding today since businesses that might not have qualified for funding in the past have become eligible to apply.
