We get several calls a week from owners who tell us that they have been turned down for an S.B.A. loan and that the program is not for them. Their perception is that if they are granted an S.B.A. loan, it is the S.B.A. that will be lending them the money — and therefore if one bank says no, there is no point in trying again for an S.B.A. loan. This, of course, is not the case. The S.B.A. is a government guarantee program; it loans no money, but issues guarantees to lessen the risk for the many banks (and a handful of nonbank lenders) who actually make the loans.
Because the government is involved, S.B.A. lenders have hundreds of pages of rules and regulations they have to follow. (I’ve never actually seen the book with all of the rules, but I imagine it would be great insomnia therapy.) What’s amazing to me is that despite all of these rules and regulations, lenders have great latitude in the loans they offer.