SBA 7a & 504, USDA and B & I Financing

What is an SBA Loan?

SBA loans are the “Gold Standard” for small business owners who want to expand. Funds from these loans can be used in a multitude of ways to help a small business grow.

What exactly is an SBA loan and how Gateway Capital Funding assists in aligning the best program with our client’s project? To begin with, we thoroughly discuss the costs, qualifications, use of proceeds and more to help you determine if this type of loan is the best option to fund your small business and or business expansion plan.

Loan Program

Gateway Capital Funding, LLC serves the small business market by providing commercial financing for projects between $500,000 and $5,000,000 for real estate, expansion, construction, refinance, business acquisitions, start-ups, franchises, furniture, fixtures, equipment, inventory, and working capital.

SBA Loans: The Basics

The SBA loan is a “US Government-Guaranteed Small Business Loan” that is defined by long-terms and low-interest rates. The SBA is the government agency that partially guarantees SBA loans.

The SBA does not loan money to a borrower, however, the SBA provides a guarantee on the loan, promising to reimburse the bank for a certain percentage of your loan if you default on that loan. This guarantee lowers the risks to banks and other lenders, encouraging them to offer these loans to more American small businesses. Many banks and other financial institutions offer SBA loans, but their process, requirements, and fees can vary.

Where Can I Apply for an SBA Loan?

Small business owners in the past had one option when looking to secure an SBA loan, they could visit a local bank, and apply for the loan, today and for the past several years that process has dramatically changed. Yes, one can still walk into a bank and ask to apply, however, and most likely 99% of borrowers are not prepared and/or do not have the knowledge how to create a loan package, lenders Do Not and Cannot prepare a borrower’s loan package”, and without the package, one Cannot apply for a loan.

Gateway Capital Funding, LLC provides a most invaluable service to our clients, we prepare loan packages, based on all the documentation required by the SBA, and provided to us by our clients. Prior to and during the packaging process, Gateway Capital Funding, LLC searching for the lender who will provide the very best loan program to our clients at every level. Gateway Capital Funding, LLC can accomplish this task, because we have decades of personal and professional relationships with lenders across America, and we know exactly which lender would best serve our client’s loan needs. This knowledge saves our clients both time and money because we are not shopping the loan to several lenders, we know the most effective match, and we deliver the client’s package for approval.

What SBA Loans Cost

How much is an SBA loan going to cost you, there is no one answer, each client, project, and the costs associated with, and the borrower will have varying costs related to their loan. However, and most importantly, the SBA Loans provide a path to achieving one’s goal, because typical lenders are most likely not approve a Non-SBA backed loan. Low-interest rates and long repayment terms for SBA loans most always are the least expensive financing available to small business owners.

SBA Loans will come with different rates depending on the lender you work with; however, the SBA establishes the maximum amount that can be charged for these loans. Again, Gateway Capital Funding, LLC always focuses on obtaining the best loan and terms for our clients.

Personal and Business Requirements to Apply for an SBA Loan

SBA loans are designed for borrowers who are financially able to fulfill their loan obligation. Most businesses or individuals can qualify for these loans if they have very good credit for the previous two years, both business and personally, no recent bankruptcies or foreclosures, and have cash flow that is sufficient to make the monthly payments throughout the life of the loan, or if it is a new loan must have a business plan and proforma to reflect repayment ability. The actual approval requirements will depend on the individual lender and factors such as your business revenue, cash flow, and credit scores.

If you meet the requirements above, you’re a very viable candidate to apply for an SBA loan. If you don’t currently qualify, Gateway Capital Funding, LLC has a tremendous list of alternate funding resources that one no doubt would qualify for.

Documents Required to Apply for an SBA Loan
There is a very lengthy list of documents and forms to be completed, as there are for any other major loan application. However, based on the vast experience Gateway Capital Funding, LLC has gained during the decades of serving clients, we have streamlined this area by creating a “master list” of all items required during the initial loan process, additional items could be requested by the lender as the loan process continues.

Use of Funds

How can the borrower use SBA Loan proceeds to save money and grow your small business? There are several of ways the borrower can utilize the funds, please find them listed below.

• Working Capital
• Purchase or build a business
• Debt Refinancing
• Purchase Real Estate
• Expand/Remodel current business
• Purchase New Equipment
• Marketing Plan
• Increase Inventory
• Hire new employees
• New Construction

SBA 7(a) Loan Program

Purpose of Loan: Commercial Real Estate purchase, expansion, construction, refinance; business acquisitions; start-ups; franchises; furniture, fixtures & equipment; inventory and working capital

Loan Amount: Capital Injection: Up to $5,000,000.00 (Five Million Dollars)

Capital Injection: Up to 25%, this amount is based on borrower and or project

Loan Term: From 7 – 25 years fully amortized

Interest Rate: Wall Street Prime Rate, plus up to 2.75%

Prepayment Penalty: If a loan is for less than 15 years, there is no prepayment penalty. If a loan is for 15 years or more, the borrower may prepay up to 25% of the principal balance during the first three years of the loan without penalty. Any prepayments in excess of 25% will be assessed a prepayment penalty of 5% in Year 1, 3% in Year 2 and 1% in Year 3

Collateral: First lien mortgage on business real estate, and UCC filings on machinery and equipment, accounts receivable and inventory

Loan to Value: Up to 90%

Personal Guarantee: Guarantee of all principals who own 20% or more of the business

Debt Service Coverage: Minimum target of 1.20x for the past fiscal year or recent interim period for existing businesses. A start-up or turnaround business will be looked at on a projection basis

Simply stated, Gateway Capital Funding, LLC and its incredible knowledgeable and experienced staff want to assist our clients to achieve their business goals, by providing them the most personalized and professional funding services available.

Introducing the Revolutionary “Bridge to a Better Place Loan”!

The Gateway Capital Funding Bridge to SBA Hybrid Loan Program is truly revolutionary in that it blends the power of a quick close with the benefits of favorable long-term financing! Affectionately referred to as the “Bridge to a Better Place Loan”, the Hybrid program offers a blending of our Bridge Loan and our SBA 540 Loans, providing financing from $1,000,000 to $15 million for 51% or more business owner-occupied properties. Simply put, if a business wants a loan to buy a property that they will occupy at least 51% of or refinance a loan on a property that the business occupies at least 51%, they are a potential candidate for the Hybrid program, also referred to as the bridge interim to SBA loan.

The Hybrid program generally applies to one of two scenarios, either it is a time-sensitive situation or situation where the loan does not meet the SBA guidelines at the moment, however, it will qualify after certain milestones are met. And, the process for a Hybrid loan is simple, a standard application for a bridge loan is submitted while at the same time collecting the base documentation needed to assess and pre-qualify the loan for a long-term SBA 504 loan. Then, we parallel underwrite the file moving towards a quick closing on the bridge loan while assembling the file and all the necessary supporting items needed to secure SBA approval for the take-out of the Bridge Loan.

According to SBA regulations, bridge loans qualify to be refinanced provided it was for a short-term use, have interest-only payments, and where the funds were originally used solely for the business borrower, making our Hybrid Bridge to SBA 504 loan a perfect financing solution for borrowers who want to close fast on a bridge knowing that a take-out solution is being underwritten in parallel!

We are just a call away, call us at 1.888.598.8319