The Small Business Administration (SBA) has slightly different underwriting criteria for loans under $250,000 compared to larger loans. These loans typically fall under the SBA 7(a) Small Loan Program, which has a simplified application process and may require less documentation than larger loans. Lenders are still required to follow SBA’s credit guidelines, but they have more flexibility in making credit decisions.
Credit decisions are based primarily on underwriting criteria that includes a review of the borrower’s credit history, business cash flow, collateral, time in business and overall business experience. Specific requirements may vary depending on the lender and borrower’s individual circumstances.
Overall, SBA loans under $250,000 are designed to help small businesses access the financing they need to start or grow their operations with less stringent underwriting criteria than larger SBA loans. The underwriting has less flexibility for recent bankruptcies, pending lawsuits and divorces. Lenders also tend to avoid construction use of funds for these smaller loans due to their increased complexity.
Monarch Commercial Capital has partnered with several lenders that have special teams focusing on these smaller loans to provide a more experienced and streamlined process for our clients.
