SBA Loan Patriot Express Pilot Program: Dangers

The dangers of the SBA Loan Patriot Express Pilot Program are limited and could be found in any basic loan program. These particular dangers concern the collateral at stake serving as a guarantee for the loan and the possibility for variable interest rates to be attached. While these are common enough factors to be found in most loan agreements, the risk that they add to the loan is not something to be overlooked.

But Patriot Express Loans Don't Require Collateral Do They?

This is a rather common misconception for two reasons. The relative newness of this particular SBA loan program coupled with its limited and always positively pitched advertising can lead to certain misunderstandings. While it is true that the patriot express program guarantees small business loans without requiring collateral, the only loans for which this holds true are those loans which are $25,000 or less. For any loans greater than $25,000 up to $350,000 the lender is encouraged to employ their existing collateral terms and conditions. For any loans over $350,000 dollars up to $500,000, the lender is encouraged to take all existing collateral available from the veteran or veteran's spouse as acting guarantee on the loan. This means that should the borrower default on the SBA loan, all available assets can be seized in order to pay back the principle of the loan.

The Lowest Interest Rate Available?

Yet another common misconception many veteran borrowers have is that the patriot express SBA loan program has the lowest interest rate available across the board. However, there are very specific conditions attached these rates. While lenders and borrowers may negotiate the fixed or variable interest rate, the SBA loan program stipulates that the lender may not charge more than 2.25% over the prime rate. However, this is only true for loans less that seven years in length of maturation. For loans over this seven year mark, the lender may charge 2.75% over the prime rate. What many veteran borrowers do not realize is that if their loans are less than 50,000 dollars, then lenders may charge 1% more. For loans less that $25,000, lenders may charge 2% more than the above percentages over the prime rate.

Should I Look Elsewhere?

The answer is no. While these percentages can come back to haunt the veteran borrower in miniscule ways, it should not be enough to turn them away from this extremely positive SBA loan opportunity. The simple paperwork, quick response time and low interest rate caps of this SBA loan program combine to form an excellent small business loan opportunity for veterans and their spouses.