Preferred Lender Status is a badge of trust from the Small Business Administration (SBA). There are many ways that lending companies can set themselves apart and improve their quality of service for borrowers. Earning Preferred Lender status is one of the most impressive among them.
How Lenders Earn Preferred Lender Status
Not every SBA lender is a preferred lender. It’s granted through the SBA’s Preferred Lender Program. To qualify, lenders must prove their ability to process SBA loans efficiently through an extensive application process.
Once a lender has an established SBA lending history, they may be nominated for Preferred Lender status by their local SBA field office, or they can request to be nominated. These nominations are then forwarded to the SBA centralized loan processing center for the SBA to review. The SBA assesses a lender’s processing volume, performance, level of risk, and knowledge of SBA policies to make the final decision. After a company becomes a Preferred Lender, the SBA reviews its status again every two years.
Why Borrowers Benefit from Working with Preferred Lenders
Working with an SBA Preferred Lender makes a big difference for small business borrowers. Preferred Lenders are allowed to access all of the SBA’s lending products, enabling them to offer funding opportunities that cater to a wider range of borrowers’ needs.
Preferred Lender status also means that lenders can process SBA loans faster. Lenders that are not in the Preferred Lender program collect a borrower’s loan application and send it to the SBA for further review, underwriting, and approval. This makes the process take longer – usually between 60 and 90 days.
Preferred Lender status grants lenders the ability to make approval and underwriting decisions on their own. This means they can give loan applicants their decisions sooner, and small business owners can get the funding they need faster. Preferred Lenders can also be a bit more flexible in their approval decisions.
When seeking funding for your small business, it’s important to find a lender who can best meet your needs. Working with a Preferred Lender may give your small business a larger selection of loan options and create a quicker path to the next level.