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The application process for an SBA loan is similar to applying for a residential mortgage in that the bank will sift through your financial documents, and try to determine if you are a good credit risk. Sometimes they ask legit questions. For example, if you are buying a subway franchise, they will want to know about your experience in the industry. Have you ever worked at, or run a subway? Were you just an employee or a manager? They want to get a feel for whether you are truly a business owner, or if you are an employee who is essentially just trying to buy themselves a job. In case you are wondering, yeah, that happens a lot. Just because someone has worked at a Five Guys doesn’t mean they are qualified to own one. Managers often don’t have to deal with all the aspects of running a business than an owner does, such as managing cash flow, hiring/firing employees, etc.
Other the other hand, sometimes you get some questions that are, and these are technical banking terms, stupid and irrelevant. Credit underwriters are sometimes younger employees, perhaps only a few years out of college. Many of these underwriters simply lack the experience to know what questions to ask, so they ask questions that really have no relevance. I used to tell new underwriters that if the answer to their question wasn’t going to change the loan decision, it probably wasn’t worth asking. For example, when performing their financial statement analysis, underwriters will compared 2 or 3 different years of financial statements to identify trends. If the borrower had 30% less revenue in 2017 than they did in 2016, that’s worth asking about. On the other hand, asking why revenue fell by 1% is simply a dumb question to question why the happened. If the revenues amounted to $500,000 per year, 1% if immaterial. If you apply for an SBA loan, there is a decent chance that you will get at least one question that makes you roll your eyes. Don’t fret, it’s all part of the process.
While it can be tortuous to endure pointless questions, it’s important to remain cordial and responsive. The people working at the bank are juggling lots of files, and I can tell you that as a former underwriter, I would always avoid having to deal with the “difficult” borrower. It doesn’t mean I’d sabotage the file or anything that sinister, but by serving my nice and responsive borrowers first, it would conceivably cause the jerk’s loan to but put on the back burner for a bit. Having a jerk as a borrower also made me hyper-focuses on my analysis, almost looking for a reason to turn them down. He’s making my life a nightmare, so human nature dictates that I’m going to approach anything that has to do with the jerk with negative emotions. Will it turn a definite yes into a no? Probably not. Could it be the difference between an approval and a decline on a loan that is borderline? Definitely. Don’t forget, when evaluating a loan application, the character of the person behind the business is part of the equation. If you can’t treat your banker like a human being, what does that say about how you conduct business in general?
Jason Milleisen can answer your questions about applying and being approved for an SBA loan. Feel free to call (toll free 1-877-436-4533) or email me (firstname.lastname@example.org). If you retain me to help you with your financing needs, I’ll give you a rebate after your loan closes equal to 10% of my commission, up to $500.