SBA programs are required to serve only borrowers unable to secure loans from another source. This report examines whether lenders comply with the credit elsewhere requirement, based on interviews with 23 commercial bank lenders that originate both SBA and conventional small business loans. Overall, lenders: are aware of the credit elsewhere requirement, say that SBA programs allow them to serve borrowers who do not meet standard conventional underwriting guidelines, indicate there is little overlap between SBA and conventional lending. SBA loans are offered with longer terms than conventional loans allowing borrowers, who commonly lack sufficient NOI, to meet DSCR requirements.
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