It is nice to see a press release from Chase blasted all over the Internet, but the chart above does say these distributed millions only consist of 7a and Express loans—what about all the other loans the SBA offers?
Express loans (those under $35 thousand) are not worth the paperwork the small business owner has to complete only to be denied. The point behind these express loans was to skip the mess of paperwork and get the cash fast—not true folks, simply not true. On the average, an Express loan or a Patriot Express loan can take up to a year to be approved so where’s the speedy process?
The 7a loans offered by the SBA are probably easier to get—if you have a large company with revenues in the tens of millions. Or, a business can get a 7a loan if their ideas are innovative and fall within one of the groups of businesses the SBA likes—technology, science, farming or healthcare. If your business doesn’t fall in one of these four categories AND produce in the tens of million, you won’t get approved, no matter what you do, how good the credit history of the owners is or how great those cash flow forecasts look.
The SBA also sets rules, but the banks get by those rules. One rule on most SBA loans is the bank is allowed to charge prime plus a percentage—sometimes up to 4 percent. So, if prime was 3.75 percent, and you do get approved, the interest rate could be 7.75 percent. But again, the lender can get around this via loan fees, processing fees, higher interest rates due to risk and no collateral, and all sorts of things they make up. You, as the recipient of the loan may need to pay high processing fees. Sure, the SBA may say it doesn't allow it, but if you really want the loan, it’s all you can do. If you want to report the fees to the SBA, go ahead, they don’t mind. But, you'll have to start the process all over again. You’re screwed either way.