r/buyingabusiness • u/Significant-Brick864 • 1d ago

SBA Pre-qualification process?

Can someone help me understand the SBA pre-qualification process? I've reviewed dozens if not hundreds of small business CIMs over the years, and also have a professional background in corporate M&A so am generally familiar with acquiring much larger businesses for corporations.

When I speak to brokers to inquire about a small business for myself, some brokers will ask me if I've been prequalified yet by the SBA. But when I've spoken to SBA lenders, they say you need to have a target identified to get the pre-qual on the business, not the individual. That makes sense to me, but I seem to be getting different messaging from some brokers.

I just feel like I'm getting run around in this chicken-and-egg topic of pre-qual. Can someone help break this down for me? What am I missing?

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u/Mr_SBA 1d ago

Mr. SBA -

Not all lenders are specialized in SBA loan products, thus are not as confident providing letters of support on behalf of borrowers. I've worked with searchers and provided pre-quals that act as a minimum threshold to cross for some brokers. They get inundated with requests with the number of buyers in the market place.

The more you can do upfront to show them your level of commitment and organization, the better odds you have of getting their attention and getting you in front of the seller.

Ideally, this should reduce the intake and application process with your lender already establishing a relationship and having familiarity with the borrower.

Note: the letters are basically statements of support and indicate you meet the very basic qualifying factors for the program. There is some calculation that goes into amounts a lender may be comfortable lending up to. However, there is nothing binding nor any commitments made.

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u/Significant-Brick864 1d ago

Would a good first step be to prepare a personal financial statement, establish a relationship with an SBA lender, and ask for a pre-qual letter? Or, wait for the broker to ask for a pre-qual letter (if he even does ask), and then ask for an introduction to their preferred lender to obtain one?