Question

• Describe in detail what the SBA role is in the loan process. What do they do to help people get loans? What do they do for the lenders to reduce their risk?

Answer 1

SBA as such does not provide loans, instead they acts as a channel to channel between businesses people looking for loans and banks lenders. It sets guidelines for loans made by lenders and makes it easier to access for business professional.

So, business people who do not get qualified for commercial loans can get loans through SBA which would help for start-ups, minorities etc  

SBA provides a guarantee to banks and lenders for the money they lend to small business owners. The guarantee provided by SBA, promises to pay back some portion of loan if the loan receivers defaults on the loan.