Certified lenders are banking institutions that qualify for inclusion in a streamlined lending program maintained by the Small Business Administration. Certified lenders are institutions that have been heavily involved in regular SBA loan-guaranty processing and have met other criteria stipulated by the SBA. When a lender is approved as a SBA certified lender, its applications are given priority by the Small Business Administration. The lender receives a partial delegation of authority and is given a three-day turnaround by the SBA on the loan applications (they also have the option of using regular SBA loan processing). In the mid-2000s, according to the SBA, 10 percent of all SBA business loans passed through certified lenders.
A lending institution can become a part of the SBA's Certified Lender Program (CLP) in one of two ways: 1) It may make a request to an SBA field office for consideration for the program, or 2) An SBA field office may nominate the lender without prompting from the institution. SBA district directors approve and renew a lender's status as part of the CLP. Primary considerations in determining whether the lender will qualify include:
- Whether the applicant has the ability to process, close, service, and liquidate loans.
- Whether the applicant has a good performance history with the SBA (i.e., has it submitted complete and accurate loan guarantee application packages in the past?).
- Whether the applicant has an acceptable SBA purchase rate.
- Whether the applicant seems able to work amicably with the local SBA office.
If a lending institution makes an application for inclusion in the CLP, only to be turned down, it may make an appeal to the AA/FA, whose decision is final.
According to the Small Business Administration, the AA/FA may suspend or revoke CLP status upon written notice providing the reasons are given at least 10 business days prior to the effective date of the suspension or revocation. Lending institutions may lose their status for a variety of reasons, including a poor loan performance record; failure to make the required number of loans; violations of applicable statutes, regulations, or published SBA policies.
Similar to certified lenders are preferred lenders. Banks that qualify as preferred lenders are among the best SBA lenders and enjoy full delegation of lending authority in exchange for a lower rate of guaranty. In other words, they do not have to run an SBA loan past the SBA before approving it. This lending authority has to be renewed every two years, and the lender's portfolio is examined by the SBA on an annual basis. Preferred lenders are also required to employ two SBA-trained loan officers. Preferred loans accounts for about ten percent of all SBA loans.
Buchanan, Doug. "SBA Fretting Over Adequacy of Credit to Small Companies." Business First-Columbus. 17 September 1999.
Heath, Gibson. Doing Business with Banks: A Common Sense Guide for Small Business Borrowers. DBA/USA Press, 1991.
Olson, Scott. "Certified Lenders Will Soon Compete: Feds hope changes will boost demand for loans." Indianapolis Business Journal. 27 October 2003.
U.S. Small Business Administration. "SBA Assistance." Available from http://www.sba.gov/starting_business/startup/guide5.html. Retrieved on 27 January 2006.
Hillstrom, Northern Lights
updated by Magee, ECDI