When it comes to small business financing, FinTech Capital Management is on your side. We’ve taken the long, complicated process of applying for an SBA loan and made it more manageable through our streamlined application process and dedicated team. Our experienced financial professionals are with you every step of the way as you complete our online application and build your financial story. And if an SBA loan isn’t the best option for you, we’ll help you find the right loan for your business from our network of trusted banks and non-bank lenders.
You might have heard SBA loans are the gold standard for small business owners who want to expand. It’s true. Funds from these loans can be used in a multitude of ways to help a small business. And as a result of the CARES Act, the SBA will pay 6 months of principal, interest, and any associated fees on any eligible SBA 7(a) loan disbursed prior to September 27, 2020.
What exactly is an SBA loan? We’ll go over the costs, qualifications, use of proceeds and more to help you determine if this type of loan is the best option to fund your small business.
What is an SBA loan?
An SBA loan is a government-guaranteed small business loan that has a long-term and a low-interest rate. The Small Business Administration (SBA) is the government agency that partially guarantees SBA loans and was founded in 1953 to support small business owners across the United States.
The most common misunderstanding about these loans is that the agency lends money directly to small businesses. However, the agency typically does not make direct loans. The SBA provides a guarantee on the loan, promising to reimburse the bank for a certain percentage of your loan if you default on that loan. This guarantee lowers the risks to banks and other lenders, encouraging them to offer these loans to more American small businesses. Many banks and other financial institutions offer SBA loans, but their process, requirements, and fees can vary.
SBA 7(a) loans from $30,000 – $350,000 from banks in the FinTech Capital Management network can be used for debt refinancing and working capital. Working capital includes operational expenses, marketing, hiring, etc. SBA loans can be used to fund new equipment purchases as well.
SBA 7(a) loans can also be used for refinancing existing business debt not secured by real estate (such as cash advances, business loans, and equipment leases).
SBA Commercial Real Estate loans from $500,000 – $5 million from banks in the FinTech Capital Management network can be used for the purchase or refinance of commercial real estate that is 51% owner-occupied.
The best strategy to follow before you apply for these loans is to be prepared. The more readily available your documentation is, the faster you’ll move through the process.
At FinTech Capital Management, we use intelligent automation to only request those documents that are actually needed based on your individual application. That means you won’t waste valuable time gathering and submitting unnecessary documents. It’s another way we support busy small business owners who have limited time on their hands.
The following is a checklist of the most commonly collected documents. It can be very helpful to work with your accountant or tax preparer to gather some of the financial documentation.
Banks in the FinTech Capital Management network require the previous 3 years of business and personal income tax returns.
A Personal Financial Statement is required from each individual owning 20% or more of the company.
Also known as an “Income Statement,” a Profit and Loss Statement measures a company's financial performance over a specific period of time. This statement includes all revenue and expenses over a given period.
This statement provides an overall financial snapshot of your small business. As an equation, it looks like: Assets = Liabilities + Equity. The two sides of the equation must balance out to equal each other.
Most banks require some type of collateral. For banks in the FinTech Capital Management network, collateral required depends on the SBA loan size. If you apply for a loan through a bank in the FinTech Capital Management network for $30,000 to $350,000, a lien on business assets is required by the bank. This includes assets such as accounts receivable or inventory, as well as fixed assets such as new equipment purchased with loan proceeds or commercial real estate owned by the business. The value of these assets does not need to equal the loan amount you are requesting.
If you apply for a commercial real estate loan of $500,000 or more through a bank in the FinTech Capital Management network, the property you are refinancing or purchasing will be the collateral for the loan and a first lien on the real estate is required. Based on the appraised value, you must have at least 10% - 20% equity in the real estate for a refinance or put 10% - 20% down for a purchase of the real estate.
These can include entity and location documents such as business licenses, articles of incorporation, commercial leases, or franchise agreements.
Expand your small business with commercial real estate loans up to $5 million.