The SBA Master Agreement: What It Is and Why It Matters
If you`re a small business owner in need of funding, you may have heard of the SBA Master Agreement. But what exactly is it, and how does it affect your business?
First, let`s define what the SBA is. The Small Business Administration is a federal agency that provides support to small businesses in the form of loans, counseling, and other resources. The SBA does not directly lend money to businesses, but rather guarantees loans made by approved lenders.
The SBA Master Agreement is a contract between the SBA and participating lenders. It outlines the terms and conditions for lenders to participate in SBA lending programs, including the 7(a) loan program, the 504 loan program, and the microloan program.
The Master Agreement covers topics such as the lender`s responsibilities, maximum loan amounts, interest rates, fees, and collateral requirements. It also establishes the SBA`s right to audit the lender`s books and records, and outlines the process for resolving disputes between the lender and the SBA.
So why does the Master Agreement matter to small business owners? As a borrower, you will be working with an SBA-approved lender that is bound by the terms of the Master Agreement. This ensures that the lender is following established guidelines and procedures, which can provide a level of protection for both the lender and the borrower.
Additionally, the Master Agreement helps to facilitate the SBA lending process by streamlining the approval process for participating lenders. This can lead to faster loan approvals and disbursements, which can be critical for small businesses that need funding quickly.
It`s important to note that not all lenders participate in the SBA lending programs, and not all SBA-approved lenders are required to sign the Master Agreement. However, if you are considering applying for an SBA loan, it`s worth asking your lender if they are a signatory to the Master Agreement.
In conclusion, the SBA Master Agreement is a critical component of the SBA lending process. It ensures that participating lenders are following established guidelines and procedures, which can provide a level of protection for both the lender and the borrower. By streamlining the approval process, the Master Agreement can also lead to faster loan approvals and disbursements. As a small business owner, it`s important to be aware of the role that the Master Agreement plays in the SBA lending process.
