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The Small Business Administration (SBA) 7a Small Loan program is easy to use. One lender created a loan program, capped the loan at $150,000 which autoscores the loan application, which is based primarily on personal credit, so prequalification approval is typically the same day! The bank does not require the borrower(s) to use their real estate as collateral so only business assets are used to collateralize the SBA Express Loan. This loan is compatible with an equipment lease for established companies to provide additional working capital!
SBA Express Working Capital Loan Description
Loan Range- This government backed loan is designed to provide working capital ranging from $20,000 to $150,000 for start-ups and existing businesses.
Underwriting Process - The main underwriting requirements are good personal credit & a reasonable amount of liquid assets which includes the borrower(s) $ in checking, savings, retirement accounts and marketable securities. The SBA loan process requires attention to detail to complete the application and contingency requirements. The loan process takes between 15 to 30 days to complete before the loan funds.
Loan Terms - The interest rate is calculated starting with the prime rate as published in the Wall Street Journal which is currently 5.5%. The bank charges a risk premium ranging from 2.75% to 3.25% depending upon the loan $ amount requested so the interest rate will range from 8.25% to 8.75% depending upon the loan amount. The larger the loan amount, the lower the interest rate. For example, a $25,000 loan has an interest rate of 8.75% while a $150,000 loan has an interest rate of 8.25%. The interest rate is variable and will change when the Federal Board of Governors raises or lowers the rates. A .25% rate change on a $150K loan will raise or lower the loan payment by approximately $18.00 per month. Closing costs are approximately 4.5% of the loan amount. The loan’s repayment term is 10 years and there is no pre-payment penalty so if the business is profitable, the loan can be prepaid to save interest expense.
$25,000 SBA Working Capital Loan - The $25,000 loan deserves its own paragraph because it is a totally unsecured loan! No business or personal assets are required to be pledged as collateral for this loan and no landlord waiver is required. The application, underwriting and closing process can be completed in less than a month if the business owner focuses on the required forms. This $25,000 business loan is absolutely the best product on the market today because it can be used for any business purpose!
A Wide Variety of Business Uses
- Providing Working Capital for Expanding Companies - This loan is compatible with an equipment lease for established companies financing new equipment. This loan will provide additional working capital needed to help with the expansion!
- Financing a New Business - If the use of the loan funds is to help finance a new business, the loan can be approved in advance to the business’s opening, however the funds will not be distributed by the bank until the new location has received a certificate of occupancy. This ensures that the money will be used to operate the new business & will not be used to pay for build out construction costs. For new businesses, the main purpose of this loan is to provide working capital to support the company until the business generates positive cash flow.
- Consolidating Existing Debt for an Existing Business – Many existing businesses have turned to alternate lenders to provide financing after the financial crisis because banks have tightened their lending standards. If a business has high interest debt, this loan product is perfect for refinancing business debt if the resulting monthly loan payment is 10% lower than the current debt repayments. This is almost a given in all cases because the interest rate is 8.25-8.75% and the repayment term is 10 years.
Conclusion
The best parts about this SBA Small loan are that the loan application is autoscored based upon personal credit, so prequalification approval is typically the same day! Also, the collateral is business assets only… not your home … just your business assets! The repayment term is 10 year with no prepayment penalty. Finally, this product is compatible with an equipment lease so it is an extra service you can provide your leasing customers!
Paul Bosley, Managing Member
Healthclubexperts.com DBA Business Finance Depot
Toll Free (800) 788-3884
Cell Phone (561) 702-5505
