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Sba Commercial Loan - Qualifications for a SBA Commercial Loan

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Over the past few years the credit crunch has made it difficult for many people to receive a loan from a traditional lending institution. While those looking for mortgages of personal lines of credit have had a tough time, getting a small business loan has been even more difficult. To make it easier the US Small Business Association (SBA) has teamed up with banks to get loans to small businesses. To qualify for a SBA commercial loan, several different qualifications must be met.

The first qualification required to receive a SBA commercial loan is that you must have been rejected for a traditional commercial loan. A SBA loan is intended only for businesses that cannot obtain traditional commercial loans and it is preferred for a business to first try and get a typical small business loan from a bank. If you are denied a traditional commercial loan, ask the bank if you could apply for a small business loan through the SBA. Most banks will be able to offer you assistance in getting a SBA loan or refer you to another bank that can.

The second qualification required to receive a SBA commercial loan is that you must provide a repayment guaranty from both yourself as well as the business. The repayment guaranty gives the bank, and the SBA, that the loan will be repaid in the event the business fails. This guaranty is typical for all small business loans, including traditional small business loans, and will require you to repay the debt to the bank in the event your business fails. If your business fails, the bank and SBA will be entitled to your personal assets.

The third qualification required to receive a commercial SBA loan is that your prospective business must meet several eligibility criteria. First, your business will need to be based in the United States and do the majority of its business with US vendors and customers. Second, your business must be a for-profit business and have the ability to repay the loan as agreed from business related earnings. Third, the use of the SBA loan proceeds must be directly used enhance the business.

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