An SBA loan is one of the least expensive ways to finance your business, but many small business owners hesitate to apply for one because of the time it can take.
SmartBiz is the fastest way we know of to get an SBA loan. Instead of the 2-3 months it normally takes, SmartBiz has shrunk the process down to less than 1 month for most borrowers. Not only that–SmartBiz also increases your odds of getting approved for an SBA loan. They work directly with preferred SBA lenders and will package your loan for you.
At Fit Small Business, we recommend SmartBiz to many of our readers. We also used SmartBiz ourselves to obtain an SBA loan so we could grow and hire more staff. In this article, we’ll tell you why we trust SmartBiz and how to get an SBA loan with SmartBiz.
Why to Use SmartBiz
There are two main reasons to go with SmartBiz if you’re on the market for an SBA loan:
- SmarBiz is much faster than the competition.
- SmartBiz may increase your odds of getting approved for an SBA loan, even if you’ve been rejected by one or more banks.
SmartBiz is not an SBA lender. They are an online platform that will work with preferred SBA lenders to get your loan funded as quickly as possible. They have a digitized application, underwriting, and document submission system, so the whole process is much faster and more convenient than getting a loan from a bank. No more folders stacked full of documents–everything can be done securely online.
At Fit Small Business, we were denied by several banks for an SBA loan, but SmartBiz was able to help us, and the same is true for many of our readers. How can this be so? SmartBiz understands the requirements of every lender they partner with, so they can help you put your best foot forward. In addition, lenders can use SmartBiz’s technology to get a clear picture of the business faster than they otherwise could. This eliminates the need for things like a business plan which a local bank may require.
How to Get an SBA Loan from SmartBiz: Walk-Through of the Application Process
The SmartBiz loan process is very simple compared to what it usually takes to apply for an SBA loan. For the most prepared applicants, they can complete the process and get their funds in as fast as 7 days after they complete the application. However, most borrowers, including us, take about 1 month to complete all the steps.
There’s a convenient progress bar at the top of your SmartBiz dashboard which will tell you what you’ve already completed and what the next step of the process is. Your application will be automatically saved at each step, so you can come back to the application if you can’t complete all the steps in one sitting.
Video Tutorial from SmartBiz:
1. Determine How Much Money You Can Borrow.
The first thing you’ll want to do before you apply for a SmartBiz loan is figure out how much money you need to borrow. SmartBiz has a sliding scale on the application page where you can see estimated monthly payments and interest rate for different loan sizes.
Evan Singer, President of SmartBiz, suggests doing two things to make sure you can afford the loan:
- Look at the cash in your business bank account at the beginning of the month and the end of the month – Is there enough left at the end to make the estimated monthly payments?
- Now add in personal income and personal debt – Can you still afford the loan payment?
If your answer to one or both of these questions is no, then you probably will not get approved for the loan and should try decreasing the loan size.
2. Make Sure You Meet Minimum Eligibility Requirements.
The minimum requirements to qualify for a loan through SmartBiz are as follows:
- At least two years in business
- U.S. based business owned by US citizen or lawful permanent resident who is at least 21 years old
- Personal credit score above 650
- Cash flow positive and sufficient revenues to cover loan payments – most businesses that qualify for a SmartBiz loan make between $50K and $5 Million in annual revenues
- No outstanding tax liens and no bankruptcies or foreclosures in the last 3 years
- No criminal record other than minor vehicle violations
If you meet these initial requirements, you’re ready to prequalify.
3. Prequalify for a SmartBiz SBA Loan.
Click here to pre-qualify for an SBA loan on SmartBiz’s website. This should take no more than 5 minutes.
You’ll be asked a series of questions about the business and the business owners.
Questions about the business include:
- Business name, address, and phone
- Number of years in business
- Number of employees
- Employer Identification Number (EIN)
- NAICS Industry Code
Questions about primary business owners (anyone who owns 20 % or more of the business) include:
- Name, address, phone number, and email
- Social Security Number (SSN)
- Do you own or rent your home?
- Citizenship status
- Driver’s license or passport number
Once you provide this information, SmartBiz will check your personal credit and business credit. This initial credit check is a soft credit pull, which means there will be no decrease to your credit score just to pre-qualify.
If you pre-qualify, you will receive instant notification as well as an email from your dedicated SmartBiz rep who will be your point of contact throughout the rest of the process. Singer says, “Every business that pre-qualifies gets white glove service with a Relationship Manager who works here in the SmartBiz office in San Francisco.”
4. Answer SBA Eligibility Questions and Supply Financial Information to Get Conditionally Approved.
The next step is to answer some SBA-required questions and financial questions about your business. There are about 40 of these questions, but don’t let this intimidate you. This section shouldn’t take more than half an hour to complete.
The SBA eligibility questions are required by the SBA and include questions like the following:
- Have you received an SBA loan in the past?
- Do you have a criminal background?
- What’s the level and scope of management experience for your business’ executives?
- What does the business do?
After answering these questions, you will need to e-sign authorizing SmartBiz to get business and personal tax transcripts for the last 3 years. You will also need to input some financial information about your business. For this you will need:
- Current year or interim P&L Statement or Income Statement
- Most recent Balance Sheet
- Personal finance statement detailing any real estate, stock, retirement accounts, or other personal assets that you own and their value.
Singer estimates that answering the SBA-required questions and financial questions might take about 30 minutes. This meshes with our own experience when we applied for an SBA loan. You just need to make sure that you have the financial records handy so it goes as quickly as possible. Once completing this step, you will be conditionally approved.
5. Upload Required Documents.
The SBA and the lender that funds your loan will require certain documentation from you, to verify the information that you’ve provided so far. These documents fall primarily into four categories:
- Business-related docs: Certificate of good standing, articles of incorporation, articles of organization, etc.
- Location-related docs: Commercial lease or mortgage statement
- Insurance-related docs: Property, liability, flood, and other types of insurance
- Financial docs: 3 years’ business and personal tax returns (even though you will e-sign for tax transcripts, not everything appears on a tax transcript, so you may be asked to submit complete tax returns)
These documents can be uploaded securely on your SmartBiz online account. You do not need to submit anything via email, snail mail, or fax.
If there are any questions along the way, your dedicated SmartBiz rep is available for help by email and phone.
6. SmartBiz Reviews Everything and Submits Application Package to Lender.
After you upload all the documentation that’s needed, SmartBiz will review everything to make sure it checks out. If everything looks good, SmartBiz will at this point do a hard credit pull and send the application package off the lender. The lender may contact you directly with any additional requests for information and documents, but in general, SmartBiz will act as the intermediary between you and the lender.
7. Sign Loan Agreement.
You’re almost done, but before you receive the funds, you need to sign the official loan agreement. A notary may come to your place of business with the loan paperwork. The paperwork will specify the term of the loan (10 year), the interest rate (currently 8.00% for loans over 50K and 9.00% for loans under 50K), and any fees, such as the SBA guarantee fee (for details on loan cost, see the next section of this article). Spouses need to sign only if they are co-owners of the business or are guaranteeing the loan.
8. Money is Wired to Business Owner’s Checking Account.
Upon signing the loan agreement, the money will be wired to your checking account, which normally takes about 1-3 business days. Any fees that you have to pay will be deducted from the proceeds before they are transferred to your bank account.
Congratulations – you have now successfully completed the process of obtaining an SBA loan from SmartBiz!
If you have any questions or issues with the loan once the money is made available to you, you should contact the lender directly who funded your loan.
SmartBiz Loan Terms & Cost
If you are considering getting an SBA loan from SmartBiz, you probably know that SBA loans are one of the most economical ways to fund a small business. But exactly how much does it cost?
Four main things will affect the cost of your SBA loan from SmartBiz:
- SBA loan interest rates – The interest rate on loans under $50K is currently 9.00% (variable at Prime + 3.75%)). The interest rate on loans above $50K is currently 8.00% (variable at Prime + 2.75%).
- SBA guarantee fee – The SBA charges a 2.25 % one-time guarantee fee on loans above $150K.
- Closing costs – Average closing costs charged by the bank are $317.
- Referral and packaging fee – SmartBiz charges a 2 % one-time referral fee and a 2 % one-time packaging fee. This compensates SmartBiz for helping you put together your loan application and sending it to the right lender.
Keep in mind that fees can be rolled into your loan and deducted from the proceeds before the loan funds are wired to your account.
SBA loans through SmartBiz are 10 year loans. You will need to sign a personal guarantee authorizing the lender to seize personal assets to satisfy the loan payments if the business cannot afford to pay back the loan. This is standard procedure and will be required for any SBA loan, even if you do not use SmartBiz.
Typically, additional collateral is not needed for your loan. However, SmartBiz’s lenders will place a lien on your business assets. The value of your assets need not equal the value of the loan, but if the business can’t afford to pay back the loan, the lender can seize any or all of your business assets.
How to Increase Your Odds of Getting Approved through SmartBiz
It probably won’t come as a surprise to you that improving your credit score or increasing your business profits can improve your chances of qualifying for a loan through SmartBiz (or any business loan for that matter).
However, to provide some deeper insight into what business owners can do to put their best foot forward with SmartBiz, we spoke to Evan Singer, President of SmartBiz. Here are some of his tips for small businesses that apply for an SBA loan with SmartBiz:
- Apply for the right loan amount – On the apply now screen, before filling out the application, use the slider tool to estimate your monthly payment. Ability to repay is the primary thing that SmartBiz and the lender will be looking for in your application, so making sure you can afford the loan payment ahead of time will prevent your application from being slowed down or rejected.
- Having your docs prepared and in order – Not only will this speed up the process, but it will show SmartBiz and the lender that you are an organized, serious loan applicant.
- File taxes on time – Filing taxes late,especially if you’re applying for a loan around tax season, can delay your application. Complete your tax filings well before you apply for a loan.
- Keep up personal and business credit – Most small business owners understand the importance of good personal credit. Fewer understand or even know that their business also has a credit score. SmartBiz and the lender will check your business credit as part of application and underwriting. To improve your business credit score, start by getting a free D-U-N-S number if you don’t have one already.
If you fail to pre-qualify with SmartBiz, they will suggest some ways for you to improve and come back. “This happens all the time,” says Singer. A business initially misses the mark but then makes the necessary changes and qualifies for an SBA loan at a later time.
If you’re considering an SBA loan to grow your business, SmartBiz is your best bet for the fastest, most convenient process. Even if you have been turned down by other banks, SmartBiz may be able to get you an SBA loan.