There are many different SBA lenders. SBA stands for the Small Business Administration, which is part of the federal government and is designed to help small businesses obtain funding they would not otherwise be capable of getting. SBA lenders are those specific lending companies that the SBA has chosen to guarantee loans through. When a business gets the backing of the SBA, after filling out an application and qualifying for funding, it will be given a list from the SBA denoting which lenders are SBA-approved and which are not.
A great deal of the time, lenders are quite hesitant to provide a small business with a loan. Small businesses are ubiquitous for failing and defaulting on any loans they’ve obtained during their short existences, the lender can end up losing a huge amount of money on such a business. The SBA does not actually extend any funding to any small businesses, but for those companies it does approve for an SBA loan, it will back up the loan federally so that if the company defaults the SBA will pay back the lender a large portion of the total loan amount.
However, the SBA itself also realizes that most businesses fail, and so in order qualify a business will have to show that this is not likely to happen. For one thing, most businesses tend to ask for a few thousand dollars on their SBA applications. SBA lenders and the SBA both are aware of the fact that a small business isn’t like to succeed on just a few thousand dollars, and will promptly turn down almost all applications that aren’t asking for enough capital. Most companies that actually get SBA funding have to ask for over $100,000.
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