If you plan to start or expand a business, most likely you will need funding. Many entrepreneurs will be looking to apply for an SBA loan through an approved lender, like SBA Capital. If you have credit, capital and collateral your journey to being approved for an SBA Loan may be easier, you may still find funding but at a much higher interest rate that aren’t realistically affordable. The following brief description of the 6 C’s creates what we refer to as the “Six C’s to qualifying for an SBA Business Loan.
- Character – frequently referred to as credit history. The borrower’s reputation or track record for repaying debts appears on their report generated by three major credit bureaus – Experian, TransUnion, and Equifax. These reports also contain information on collection accounts, judgments, liens and bankruptcies for a period of seven years.
- Capacity – measures a borrower’s ability to repay a loan by comparing income against recurring debts and assessing the borrower’s debt-to-income.
- Capital – Down payments indicate the borrower’s level of seriousness, making lenders more comfortable when extending credit.
- Collateral – An evaluation of the collateral by the lender allows them to quantify a potential loss, if any, should the loan go into default.
- Conditions – (most important 5 C’s) How the borrower intends to use the money. There is an astronomical difference in making a loan to a borrower that intends to do medical research knowing it will be years before receiving revenue, with a real possibility of never receiving any revenue, as opposed to service business like a restaurant, medical clinic, convenient stores, etc. that enjoys revenue on the day they open for business.
- Credit Score – Lenders used the Five C’s for centuries to underwrite loan request. In recent years the computer and the development of software has revolutionized the industry. Software used by lenders electronically notifies all three credit bureaus when a monthly payment is late which becomes a permanent record that is electronically sent to any lender that request a routine credit report on this borrower.
What can a borrower do – The credit score is essentially a re-cap of the first 5 C’s that software has compiled into a number that serves a valuable service but routinely omits important financial facts pertaining to a specific business. SBA-Capital, does not rely exclusively on the credit score however, we also utilize each of the other 5 C’s which is a more reliable barometer of the short and long-term future of the business as compared to a credit score. Your credit score may fluctuate 100 points in one month, depending on the latest computer-generated report. A complete analysis of the first 5 C’s will show a more consistent and correct financial history of your company and often provides the lender with positive reason as to why the business loan should and will be made.
Equity required: Each “Working Capital and Business Loan” request can vary from zero equity required to 20% of the loan amount. Example, your existing business, including the Real Estate, may currently have substantial equity on its balance sheet. If so, your new loan may not require any “out of pocket cash equity”. Or, if your current business has very little equity on its balance sheet your equity required may be up to 20%. Contact SBA-Capital for equity specifics on your loan.
Loan Amount $100K to $5 M: The minimum “Working Capital and Business Loan” amount is $100 K and the max amount is $5 M. Example, you may have a business that needs new equipment, floor covering, and working capital that totals $100 K combined. Or, you may need to purchase the land next door, construct 30,000 square feet of space with new equipment plus working capital that combined may total $5 M. Contact SBA-Capital for a free consultation regarding your loan amount as well as the equity required, if any.
Who qualifies: Type business that qualifies to apply for a SBA business loan:
- Any company that is a “for profit business”.
- Owners must be a US Citizens or have a Green Card.
- Must not have defaulted on a SBA or student loan.
How to apply: if you would like to apply to SBA-Capital for a business loan:
- Call 214-726-9000 or email [email protected] to discuss your needs or any questions you may have.
- If you would like to apply for a business loan after the initial conversation, we will email the loan request package that applies to your type business.
- Once you return the information, we provide a term sheet to you within three days describing the terms and conditions of your loan request.
- There will be no charge or obligation to process the above loan application.
- If you elect to move forward with the loan, we typically close business loans within 45 days.
SBA was founded to help the local business person and create jobs in the U.S. The program has exceeded all expectation creating hundreds of thousands of jobs each year and total annual loans typical exceed 30 Billion dollars annually. Our objective at SBA-Capital is to make it possible for our borrowers to select and obtain the best possible loan for their financial and wealth planning.
Don’t miss the next great tip!Contact us today, we can help. Specializing in Small Business Administration Loans | (214) 726-9000 | Hershel Pierce [email protected]
Working Capital and SBA Business Loans