There are two very different business finance perspectives about trying to buy a business by using an SBA loan and commercial mortgage:

(1) Use an SBA loan if it is practical to do so.

(2) Avoid an SBA loan whenever possible.

These viewpoints are in extreme disagreement because of an SBA loan process that many borrowers view as excessively difficult.

Despite the negative business finance atmosphere surrounding the SBA loan process, it can be worth the time and effort for many borrowers. There are critical business financing and commercial real estate loan obstacles to avoid with an SBA loan, and there are only a few truly capable lenders in this demanding commercial mortgage and working capital area. It is vital for a successful SBA loan program to involve an SBA loan advisor that is skilled at this rigorous business loan system.

One of the major drawbacks of an SBA loan has historically been the difficulty of refinancing the SBA business financing later. Recent business finance developments have changed this situation so that it is now more practical to refinance an SBA loan. It is still accurate to say that refinancing is not routinely available, but more importantly it is much easier to obtain than it was in prior years.

The primary SBA loan refinancing problems can be avoided with some advance business loan planning. If it is feasible to arrange the original commercial mortgage without using an SBA loan, subsequent business refinancing will be smoother without SBA loan involvement. Business borrowers should evaluate if an SBA loan is required in the early business financing.

One of the most frequent criticisms of an SBA loan program is the amount of paperwork required to complete the business loan process. What many commercial borrowers fail to understand is that any business financing process is likely to involve substantial paperwork and formal documentation requirements. In the end the key is working with an SBA loan advisor that understands what is required and can facilitate the submission procedures.

Beyond the paperwork concerns, a more critical and real business finance problem is working with an SBA lender that is not very good at successfully completing SBA loan requirements. Even though there are many commercial lenders that publicize their ability to process an SBA loan, in reality there are very few lenders nationwide who are consistently successful at completing the SBA loan process in a timely manner.

The practicality of refinancing a commercial loan will be determined by the commercial borrower decisions when acquiring the original business financing. In obtaining a commercial loan to buy a business, non-SBA business finance possibilities should be evaluated along with the option of obtaining an SBA loan.

A conventional business loan might be more feasible than many borrowers realize. The possibility of refinancing either an SBA loan or conventional business financing will ultimately be more practical and successful when working with a skilled commercial mortgage advisor and commercial lender.