The decision to apply for a Small Business Administration (SBA) 7(a) loan is a significant milestone in the journey of an entrepreneurial venture. This loan, named after section 7(a) of the Small Business Act of 1953, exists to assist entrepreneurs in receiving necessary startup capital when conventional financial avenues may be inaccessible. However, before leaping into the complex labyrinth of SBA financing, it's essential to critically interrogate your potential SBA lender. In this pursuit, we propose 11 essential inquiries to direct at your potential lender.

• What is your experience with SBA 7(a) loans?
• How do you handle underwriting?
• What are the interest rates and fees?
• What are your credit requirements?
• What are the required collateral standards?
• What documents will I need to provide?
• What is the expected timeline for approval and funding?
• What are your default rates?
• Can you help me through the SBA packaging process?
• How do you handle servicing and liquidation?
• Why should I choose your institution for my SBA 7(a) loan?

The SBA 7(a) loan program, while potentially beneficial, is fraught with complexities. Default rates for these loans are historically higher than conventional loans, indicating an inherent risk associated with this financing method. Therefore, diligent probing of potential lenders is not merely an administrative step but an essential risk management strategy.

It's crucial to remember that while the SBA partially guarantees these loans, reducing lender risk, the borrower is still fully responsible for the debt. As John Maynard Keynes wisely noted, "If you owe your bank a hundred pounds, you have a problem. But if you owe your bank a million, it has." As you traverse the SBA 7(a) loan terrain, ensure your lender has the necessary tools and commitment to traverse it with you.