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How to Get a Small Business Loan.
What are They?
Lender of large $ amount SBA loans with 7 year to 25 year terms.
How popular is it?
6th largest SBA lender in the US; more than 300 loans totaling over $105 Million.
Who will qualify for a loan?
Business owners should have a minimum credit score of 640 and be cashflow positive. Startups can qualify for a loan if the owners have experience in the industry.
Who are they right for?
Businesses that qualify for an SBA loan, need to borrow large amounts, and can wait several weeks for approval.
Non-profits, loan packaging, speculative businesses, gambling, investment, lending, real estate investment firms, dealers of rare coins and stamps, pyramid sales plans, charitable institutions, religious institutions, government owned entities, political or lobbying organizations, consumer and marketing cooperatives, construction/tenant improvements.
Personal Guarantee required?
Yes. Specific collateral is required.
Your application can be approved within 3-5 business days after you submit the online application and necessary documents. Accessing loans funds can take 4 or more weeks after approval.
Where do they lend?
All 50 states.
How much do they lend?
$350K to $5 Million for SBA 7(a) loans.
How much can I qualify for?
Varies. Based on projections of ability to repay.
For how long?
Borrow for 7 years to 25 years.
Cost/Interest rate of loan?
The Effective Annual Percentage Rate is currently just under 7 % (see cost section for more details).
How do payments work?
Fixed payment is automatically deducted from your bank account on a monthly basis.
General business and project information form, last 3 years business tax returns, interim profit & loss statement and balance sheet, business debt schedule, last 3 years personal tax returns, personal financial statement form.
No Reviews Available.
There are three primary benefits to borrowing from Celtic Bank, the 6th largest SBA lender in the nation:
- Access to large loan amounts – Celtic Bank is a good choice for businesses that meet the requirements for an SBA loan and need to borrow more than $350,000. Celtic Bank loans up to $5 million. If you need an SBA loan for less than $350,000, we recommend SmartBiz.
- Low Interest Rates – Celtic Bank charges interest rates of 5.5% to 6%, making them the cheapest loans your business will likely be eligible for.
- Long repayment terms and no pre-payment penalty. SBA 7(a) loans have 7 to 25 year terms depending on what you do with the loan proceeds. This can make monthly payments more affordable. You can also pay the loan off early with no pre-payment penalty.
- Startups are eligible – Most other lenders will lend only to established businesses. Celtic Bank will lend to startups as long as the owners have experience in the industry.
The downsides to Celtic Bank are the high credit score cutoff and the lengthy application process for SBA loans. To qualify, you generally need to have a credit score of at least 640. For SBA loans under $350K, we recommend SmartBiz because it has a faster application process than Celtic Bank.
If you’re not familiar with SBA loans, take a look at our guide.
- Personal Credit Score: At least 640.
- Years in Business: Generally at least 3 years, but startups are eligible if the owners have prior experience in the industry.
- Revenues: No required minimum. You should be cashflow positive.
- Industry Exclusions: Non-profits, loan packaging, speculative businesses, gambling, investment, lending, real estate investment firms, dealers of rare coins and stamps, pyramid sales plans, charitable institutions, religious institutions, government owned entities, political or lobbying organizations, consumer and marketing cooperatives, construction/tenant improvements.
- Other Qualifications: Business must be US-based, owner(s) current on other government loans, owner(s) cannot be on parole or a defendant in criminal proceeding. See full SBA eligibility criteria here.
Collateral Required? Yes. In general, you must pledge specific collateral to secure the loan. If you don’t pay back the loan, Celtic Bank can sell off your collateral to satisfy the loan if you don’t pay.
Does the loan require a personal guarantee – From who? Yes. Pursuant to SBA requirements, Celtic Bank requires a personal guarantee from every person who owns 20 % or more of the business. A personal guarantee means you are individually accountable for repaying the loan, even if your business closes down. If you don’t make timely payments, your personal credit score can be affected. The lender can also take your personal assets (e.g. car and house) if you don’t pay the loan.
Structure of Debts: Traditional loan.
Servicing Fees: None
Are interest rates variable? Yes. Loans have a variable prime rate plus 2.25 % to 2.75 %. The prime rate, which is a consensus interest rate set by the largest American banks, is currently 3.25% and varies over time. This brings the total interest rate on Celic Bank SBA loans to 5.5 % to 6 %. Celtic Bank told us that 6 % is typical.
How Loan Costs Work With Celtic Bank
There are 4 fees associated with a loan from Celtic Bank:
- Packaging Fee – Typically $2500.
- SBA Guarantee Fees (paid to the SBA) – There is a one-time fee of 3 % or higher of the guaranteed amount, based on the amount of the loan. There is also an ongoing yearly fee of 0.519 % of the guaranteed portion of the outstanding loan balance (lenders are responsible for paying this yearly fee to the SBA, but it is part of the loan cost).
- Third Party Fees – Varies.Includes the cost of appraisals, environmental reports, title insurance, credit reports, flood search, etc.
- Annual Interest Rate Charged by Celtic Bank – Celtic Bank charges interest of 5.5 % to 6 % on SBA 7(a) loans. In general, interest rates are lower for larger loan amounts borrowed for shorter time periods.
Converting the loan cost into an Annual Percentage Rate (APR) makes it easy to compare Celtic Bank loans with other loan products. You can use the calculator below to calculate APR on a Celtic Bank loan:
Here is what the effective APR and monthly payments would be for different Celtic Bank loan amounts. We assume an interest rate of 6 %, a 10 year term, and an SBA guarantee percentage of 75 % of the loan amount in all cases. Note that these calculations do not take third party costs into account, which will raise your monthly payments and APR by a small amount.
- $350,000 = 6.76 % APR ($3,886/month)
- $500,000 = 6.71 % APR ($5,551/month)
- $1 Million = 6.74 % APR ($11,102/month)
- $2.5 Million = 6.75 % APR ($27,755/month)
- $5 Million = 6.74 % APR ($55,510/month)
As you can see from this example, you are paying less than 7% APR for a Celtic Bank loan. In general, your loan cost will be less if you borrow for less time. For example, if I borrowed $1 million from Celtic Bank and took 10 years to pay it back, I would have to pay back $1,332,240 in total. If I took only 5 years to pay back the $1 million, I would have to pay back only $1,159,980 in total.
Celtic Bank’s APRs are multiple times cheaper than the APRs charged by alternative lenders, such as OnDeck, CAN Capital, and Kabbage. It is also cheaper than peer-to-peer lenders such as Funding Circle and Lending Club. Celtic Bank loans larger amounts that SmartBiz, the other SBA provider that we reviewed, so its annual interest rates are lower than the annual interest rates charged by SmartBiz.
Celtic Bank has a long application process, which is typical when you go to a bank for an SBA loan (this is why we recommend SmartBiz’s streamlined application process if you are seeking an SBA loan under $350,000).
With Celtic Bank, you begin with a brief online questionnaire (takes about 5 minutes) that tells you which of Celtic Bank’s loan products would be the best fit for your business. You can then choose to learn more about the product or apply right away online. You currently cannot upload documents on the online application, so you email those separately to a loan specialist.
Once you’ve submitted your application and documents to Celtic Bank, they will make an approval decision within 3-5 business days. At that point, the slow process of appraising collateral begins. Once collateral is appraised, you sign your loan agreement, and the funds are deposited in your account. The full process can take 4 weeks or longer.
What documents need to be provided? General business and project information form, last 3 years business tax returns, interim profit & loss statement and balance sheet, business debt schedule, last 3 years personal tax returns, personal financial statement form.
Do they need online access to any systems during the application process (e.g. Quickbooks, PayPal, bank accounts)? No.
Is there a credit report pull? If so at what point in the process? Yes, you give authorization for a credit pull during the online application. It’s a “hard” credit pull, so it can temporarily hurt your credit score.
What credit reporting service do they use? Average score from TransUnion, Experian, and Equifax.
Loan Sizes and Terms
What is the minimum / maximum length of loan? SBA 7(a) loans have terms ranging from 7 years to 25 years. You can always pay off an SBA loan early with no prepayment penalties.
What is the minimum / maximum amount of the loan? SBA 7(a) loans from Celtic Bank range from $350K to $5 million.
Payment Methods & Schedule
- Schedule of Payments: Monthly.
- Payment Initiation: Fixed payment is automatically deducted from your bank account by Celtic Bank.
- Method of Payment: ACH
- Penalties for Missing Payments: Pursuant to SBA rules, late or missed payment penalties can only be charged when a borrower is more than 10 days delinquent and cannot exceed 5 % of the regular monthly loan payment.
- What Happens on Pre-Payment? There is no pre-payment penalty. You save money when you borrow for less time.
Celtic Bank has phone and email customer support for borrowers and applicants. Unfortunately, very little information is available on their website.
US-based or International? US-based. Celtic Bank is located in Salt Lake City, Utah.
Support Hours: Phone and email support are available Monday-Friday 9 AM – 5 PM MST.
Other Lending Products
Need some money for your business? Click here to get our FREE Guide:
How to Get a Small Business Loan.
The Bottom Line
There primary benefit of borrowing from Celtic Bank is access to large loan amounts at low interest rates. Celtic Bank issues SBA loans of up to $5 million. Even startups can qualify for a loan through Celtic Bank if the business owners have prior experience in the industry.
SBA loans have very low interest rates hovering around 7 %, making them far cheaper than alternative loan providers. You also have a long repayment terms of 7 to 25 years to help you afford your monthly payments. You can choose to pay off the loan early and save money.
The downsides to Celtic Bank are that it’s hard to qualify and takes a long time to get approved. For SBA loans under $350K, we recommend SmartBiz because it has a faster application process than Celtic Bank.