HOW DOES SBA LENDING WORK?

The U.S. Government guarantees a portion of each SBA loan made by its lenders.  The exact portion depends directly on the size of the loan. The guaranty generally ranges from 75% to 90%. The purpose of the guaranty is to induce the lender to make the loan to the small business, which may have some lending deficiency as determined by a bank.

The SBA lender must determine if the small business is eligible to receive the government guaranty. However, it should be noted that even if the small business is eligible, the SBA lender is not obligated to make the loan.

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