As a retired bank examiner I would like to comment on your Aug. 8 editorial (“In Our View — Small Business has Big Impact”). In my experience, banks that offer Small Business Administration-guaranteed loans use the same analytical approach to commercial loan approvals as the lenders would apply to non-guaranteed loans.
Typically SBA guarantees range from 75 percent to 90 percent of the loan amount. After the bank’s analysis, the SBA’s staff, generally experienced analysts, will also pass judgment on the borrower’s ability to repay. In the relatively rare instance of default, the bank’s documentation and adherence to loan requirements has to be nearly perfect before the SBA will honor the government guarantee. In my experience, the default rate on SBA-guaranteed loans was relatively low.
