SBA lending currently dominates advisor lending marketshare, but SBA lenders are not all alike.
While the SBA program has their requirements and underwriting criteria, different SBA lenders overlay their own requirements and criteria on top of those required by the SBA program.
These additional requirements by SBA lenders means that an advisor who is qualified for a SBA program loan, still may not qualify for a SBA loan from a specific SBA lender.
Some SBA lenders for example have much higher minimum credit score and Debt Service Coverage Ratio (DSCR) requirements than what the SBA program allows for. For example the SBA allows for a DSCR of 1.15 but an SBA lender may require a DSCR minimum of 1.75.
A SBA lender may require a minimum $20MM AUM requirement from their advisor borrowers even though there is no such AUM requirement from the SBA itself.
Some SBA lenders refuse to provide an SBA loan to associate or junior advisors to acquire the practice of the principal advisor even though it is allowable by the SBA program.
Many SBA lenders will not provide loans to an advisor with a current tax lien though the SBA program allows for loans to be granted to pay off an IRS tax settlement plan.
There are many cases in which an advisor with a previous bankruptcy can qualify for a SBA program loan but will be rejected by an SBA lenders own policy of not lending to advisors with a prior bankruptcy.
While the SBA requires SBA lenders to take collateral on property the borrower has 25% equity in, some SBA lenders will require the collateral anyway even if the advisor has less than 25% equity.
This is why AdvisorLoans utilizes a network of SBA lenders for the benefit of our advisor clients. We insure that your advisors who qualify for the SBA program aren’t prohibited by any single SBA lender’s additional requirements.