What is an SBA Lender?
The SBA has many requirements when it comes to small business loans. In most cases, you will need a personal guarantee from you, the business owner. This is a standard procedure for debt-based funding. Personal guarantees are a promise to use your personal assets in order to repay the loan if the business fails. Personal guarantees are binding no matter what type of entity you are. Continue reading to learn more about the application process.
Business credit score required
Before you submit an application to an SBA lender, be sure to understand the minimum business credit score. The SBA and many other lenders will look at both your personal credit score and your business credit score when deciding on whether or not to offer you a loan. Your personal credit score should be kept separate from your business credit score. Also, ensure that you pay all unexpected expenses promptly. You should also aim to make your business profitable. SBA lenders can help you improve your credit score in many ways.
Interest rates
When negotiating with a 7(a) lender, be sure to compare interest rates. These loans typically have a very low rate of interest, which is often lower than prime. The bank is less likely to take on these loans because they are secured by real estate. Be aware that prepayment fees may apply. Before you sign the dotted line, make sure you fully understand what you are signing up.
Time is key to a successful business
Before submitting an application to an SBA lender, you should understand what they require. These lenders may request personal financial statements, bank account statements, and business financial statements. It’s vital that you keep your records up-to-date. Although building credit is not something you can do overnight, it is important to start early before you need the money. Below are some things to consider as you submit your application.
Closing costs for loans
You should be aware of the loan closing costs when you apply for an SBA lender loan. These fees can vary from one lender to another and will depend on your specific needs. For an appraisal of commercial property in Illinois, you can expect to pay anywhere between $1,250 and $5,000. SBA lenders may also charge a guarantee fee. This fee is calculated on a sliding scale depending on the amount of the loan. The fee will be paid over the loan term and is usually included in the loan amount.
SBA Loan Options
There are several ways to get an SBA loan if you’re looking to fund your startup. One of the most straightforward ways to get an SBA loan is through your local bank. They will usually have a representative who can assist you. It is easier to submit documents and follow the next steps with a local bank. However, if you don’t have a local lender in mind, you can still obtain a SBA loan through another lender.