Thursday, April 24th, 2014

SBA Unsecured Small Business Loans - Quick Overview

How long does it take?

The initial tentative decision online takes approximately fifteen minutes. Original documents are then required prior to funding. Upon receipt, it takes approximately seven to ten days to receive funding with the complete loan papers–by a direct wire into your business account.

What kind of government loan is it?

This is under the Community Express Loan Program. Unlike disaster assistance which is loaned directly by the Federal government, private lenders loan the money in this Program and are monitored by the U.S. Small Business Administration. That is why they are called “SBA Loans”. We deal with a leading SBA lender with many years of experience and fully licensed.

Who can apply?

Any small to medium size business, whether a sole proprietorship, partnership, limited liability company, or corporation. You must be a U.S. citizen or have an issued permanent resident card. All businesses qualify. There some minor exceptions, for example: non-profits, gambling ventures, businesses of a religious nature, businesses of a sexual nature, management of your own investments (for example, owning and managing your own apartment building), and speculative real estate (for example, buying property on foreclosure, fixing it up, and selling).

What are the payments and fees?

Monthly payments, taken as an automatic deduction from your business account on the first of each month, are under a variable interest rate. See the home page for the current payments, which are very competitive in the SBA marketplace. The loan processing fee for loans between $5,000 and $12,500 is $450.00; for loans between $15,000 and $25,000 it is $550.00. This is not paid until two or three days after you receive the loan proceeds. In other words, the loan funds these expenses (you need not have this amount in your business account at the time of the application). You can apply before opening a business account, but such an account is required prior to funding. There are no upfront fees and no charge if you are turned down. There is a one-time guarantee fee payable to the Federal government to defray costs of reimbursing banks on defaulted loans of 2% of 85% of the loan principal (no such fee for the smaller $5,000 loans), which is taken out of the proceeds at funding (for example, $127.50 on a loan of $10,000.00). The interest, processing fee, and guarantee fee are tax deductible.

What do I need to send in?

These loans have been specifically devised by the U.S. government to be minimal on the paperwork. Other than the standard loan paperwork, there is no requirement of furnishing copies of contracts, brochures, letters of recommendation, corporate or LLC papers, bank records, tax returns, financials, or business plans. However, if you have already prepared a business plan, it is a good idea to include it in the package.

How much are the loans?

Normally, if approved, younger businesses and start-ups are between $5,000 and $12,500. More seasoned or established businesses are typically between $15,000 and $25,000. These are guidelines only, and there have been situations in which start-ups, for example, receive some of the larger loans.

What are the terms?

Ten year fully amortized, variable interest loans. The interest rate is set at 4.5% (never changes) plus the Wall Street Journal prime rate (can change). As an example, the monthly payments have gone from $84.00 per month/$5,000 in the year 2000 to $64.00 in 2008. Please see the current monthly payments on the homepage.

What credit do I need? Personal credit (not business credit) is checked through Experian as to all owners who have a 20% or more interest. They are looking for satisfactory credit. For more information, please call one of our representatives–with a recent copy of your credit report in front of you (discussed confidentially and no copy is forwarded to us) and we would be happy to discuss it in detail and give a better idea of your chances.

Strategies for Small Business.