Introducing the e-Signature to the SBA Loan Process

By |2014-10-08T12:03:59-07:00October 8th, 2014|

The e-signature is not exactly new. However, there is currently no practice in place for accepting e-signatures in the Small Business Administration loan process, even though the Electronic Signatures in Global and National Commerce Act (ESIGN) made legal the use of e-signatures on binding documents in 2000. Many consider the SBA loan process lengthy and time-consuming and this could possibly deter small businesses from pursuing additional financing. The time it takes to get through the process, as well as the financial and emotional stress that could be associated with it, just might not be worth the trouble for some small businesses. The Small Business Loan Simplification Act of 2014, proposed by House Small Business Committee Chairman Sam Graves, would permit both applicants and lenders to use electronic signatures and records in the application process for SBA guaranteed loans and require the SBA to accept the same. The use of e-signatures has been shown to decrease document turnaround time by around 80 percent. The Act would likely cut the loan application process by about 2-3 days, according to Chairman Graves. The current number of traditional loans that are $1 million or less is down about 14% since 2008. The simplification and streamlining of the SBA loan process is intended to change that. By making the process faster and easier, the goal is to encourage small businesses to apply for financing and stimulate small business growth by increasing access to capital. Photo Credit: Sebastien Wiertz, Flickr