How to get SBA Loans?
It’s 2021, the beginning of a new decade, and enthusiastic entrepreneurs are blowing the world with new business ideas and plunging to change the business world. But what if you have the guts to rule the business world but not money or stockpiled your business, and it is stuck in hurdles and not giving the expected revenue? After starting a small business takes time to hit the self-funding shape.
If you are eager to start your small business or your current business needs refinancing, BitX Funding has initiated SBA (Small Business Administration) Paycheck Protection Program Loan to make your 2021 memorable.
The Complete Guide to Getting SBA Loans
What is an SBA loan and how it works?
SBA loans or Small Business Administration loans are renowned for financing small businesses. Standard lenders offer SBA loans from $50,000 up to $5,000,000. SBA loans are partially guaranteed by a federal government authority (SBA).
Some newbies consider SBA a lender, however, SBA works with established financial institutions to ensure risk-free lending and backs up a specific percentage of the loan. If the borrower fails to return the loan, SBA funds the lender with the contracted percentage of the loan.
Since federal authorities are involved in lending operations, an in-depth application process is required, making it a slow-paced lending option. But somehow, it is secure for both lender and requester.
Steps to apply before SBA 7a loans:
If you are eager to inject financial boosts into your business or startup business, Bitx Funding has a complete guide on How to get an SBA loan? Every lender has its own terms and conditions applied before getting the loan – This guide is circled around Bitx Funding’s and SBA’s standards.
The first step before putting your documents on the table for every type of loan is to check whether you meet the prescribed standards of the lender. Bitx Funding has streamlined the eligibility criteria that are:
- A good FICO (Fair Isaac Corporation) of 650 or above.
- 2 Years in Business
- 25 DSCR
- $200K annual Revenue
- Proof that borrower has tried and failed to get a loan from another lender
- Check your score
- No Criminal history
- No defaults on government loans
- Meets the business definition of SBA
- Owners have invested a considerable amount of equity in the business bases in the US
Choose a plan:
Different types of loans offer different terms and conditions, including loan amount, payback time, and interest rate. After standing well with the lender’s eligibility criteria, the next important step is to choose the right plan according to your requirements.
Many requesters pass out this important step and tend towards documentation things after knowing they qualify the criteria to get a loan. BitX Funding offers 7(a) loans, 504 Loans, Disaster assistance loans, and export express programs under the consideration of SBA and authorities regulated by SBA.
Types of SBA Loans:
Each SBA loan type is distinct from others because of its terms and conditions.
SBA 7(a) Loan:
SBA 7(a) loan ranks among highly lent loans for a small business range up to $5 Million. Unlike other loan options where the lenders apply certain conditions about where to spend the amount, 7a loans offer noticeable advantages. Some valid uses of 7a loans are:
- Business expansion
- Purchase of vacant property
- Addition of inventory
- Seasonal credit
- Remodeling of building
- Start-up expenses
- Replay debts and building purchases
SBA further partitions the 7a depending upon the amount lent. If you are borrowing less than $150,000, SBA guarantees 85% of the amount and 75% for loans greater than $150,000. If borrowing more than $350,000, SBA restricts the borrower from requesting more loans from the same or different lenders.
SBA 504 Loan:
CDC loans or SBA 504 loans work great if you agree to go by a fixed interest rate. SBA 504 loans are offered up to $5M for business expansion carrying SBA’s guarantees up to 40%. SBA 504 loans require no collateral by lenders, and fees are lower than 7a loans. To meet the basic requirements, $15 million and an average net income of $5 million or less is required.
Some valid uses of 504 loans include purchasing or remodeling an existing building or new building, purchasing machinery required in business, and repairing parking, streets, and other business belongings. SBA also applies a few prohibitions for 504 loans, such as the purchase of inventory, refinancing debt, and investment in rental real estate.
The smart vision behind disaster assistance loans is to offer financial help to non-profit private organizations or small businesses in disaster conditions with long-term repayment options. The borrower can repair the dents by requesting up to $2M keeping the terms and conditions intact. SBA backs up the entire loan amount in exceptional cases, and an increase of loan up to 20% is possible, depending upon the physical loss. Damages of property broke down of machinery and addition of inventory and business belongings are packed under fair uses of loan.
Other than specific standards of SBA, each lender has its own way of documentation. Since SBA covers a huge portion in backing up the loan amount, SBA conducts detailed documentation, which nearly covers all sorts of documents required by most of lenders. Documents include:
- How much you want to borrow
- Loan utilization plan
- Financial projections
- Cash flow report
- Profit and lost (P&L)
- Balance Sheet
- Business tax returns for two years
- Personal tax returns for two years
- Personal financial statements of each owner
- Professional Resume of each owner
- Report about the business plan and history
- Statement of ownership
- Business licenses
- Business leases
If the business owner has another running business and has 20% of the worth concerning the requested loan, the lender can also request the information of that business.
Terms, Conditions, and Benefits of Bitx Funding over other Lenders
650 FICO, whereas the standard score requirement is 680
5.75% Lowest annual interest rate (APR)
10 to 25-year terms Short- and long-term payback
$30,000 – $5,000,000 Estimated loan 10% of your annual revenue
Offering loans to 700+ Industries (Restaurants, Manufacturers & Doctors)
All 50 States of the US (California to Connecticut)
BitX Funding is the online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and are passionate about helping your company reach its full potential.