SmartBiz offers an easier and quicker way to get a Small Business Administration loan, or SBA loan, than from a traditional bank.
SmartBiz may be a good fit for your business if you:
Need to refinance debt or expand your business: SmartBiz offers SBA 7(a) loans of up to $350,000 at annual percentage rates ranging from 9.44% to 10.78%.
Hope to finance a real estate purchase: SmartBiz offers SBA 7(a) commercial real estate loans from $500,000 to $5 million at APRs ranging from 7.12% to 7.18%.
Need cash within several weeks: The company can fund loans in as little as a week, although it typically takes longer.
Have an established business: Minimum requirements for regular SBA 7(a) loans are two years in business and $50,000 in annual revenue.
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Reasons to use SmartBiz
It would be tough to beat the low rates of SBA financing from SmartBiz, which range from an APR of 9.44% to 10.78% for regular term loans and from 7.12% to 7.18% for commercial real estate loans. SmartBiz’s online platform makes the process less intimidating and cuts the application time significantly, from months for a traditional bank to as little as a week.
Benefit: SmartBiz offers a faster, less stressful way to get an SBA loan, which otherwise typically involves a long, tedious process with a commercial bank.
Drawback: You must have a strong, established business to qualify. And be prepared to upload or send via email lots of documents and files.
Manageable financing for growth and other needs
Whether you’re looking to increase inventory, buy equipment or hire more employees, getting an SBA loan from SmartBiz can help you to grow your business. You get the funds you need on manageable repayment terms and at relatively low rates, which also potentially makes it a viable option for refinancing higher-interest debt.
Low-cost financing for buying commercial real estate
Besides standard term loans, SmartBiz also offers 7(a) SBA-backed commercial real estate financing from $500,000 to $5 million. With low borrowing costs and no balloon payments, these loans are a good option for business owners looking to buy commercial real estate or refinance a commercial real estate loan. SmartBiz commercial real estate loans can’t be used for new construction. The APR for the loans, which have a 25-year term, ranges from 7.12% to 7.18%. Additional fees may apply depending on the property type and other factors, according to the lender.
For commercial real estate loans, at least 51% of the property you’re buying has to be occupied by and used by your business. SmartBiz says its partner lenders typically require a 15% down payment, although a 10% down payment “with additional collateral” could be acceptable.
There’s a prepayment penalty in the first three years of a 25-year commercial real estate loan. You must pay 5% of the loan amount if you pay back the loan in the first year, 3% in the second year and 1% in the third year. There are no prepayment penalties after the third year for the remaining life of the loan.
Minimum qualifications for SmartBiz’s commercial real estate loan:
- 675+ personal credit score
- At least two years in business
- $50,000+ in annual revenue
Marketplace matches borrowers to lenders
SmartBiz’s platform is a marketplace in which your application is evaluated against the credit requirements of SBA preferred lenders; it currently has eight bank partners. The advantage, the company says, is that it can match you to the bank best suited to your needs, boosting your chances of getting approved.
SmartBiz also offers a free online tool, called SmartBiz Advisor, that shows your probability of loan approval and advice on how to increase your approval odds. The tool provides personalized insight into factors used by lenders to evaluate your business, such as its debt coverage, debt usage and business revenue trends.
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Where SmartBiz falls short
Not for businesses with wobbly finances
You don’t need a really high personal credit score to get a SmartBiz loan, but it should be good. Borrowers average 705, according to the company. The typical SmartBiz borrower has 10 years in business and annual revenue of $1 million.
Revenue requirements may be too steep for new businesses
SmartBiz uses “key indicators” to evaluate whether you’re a good fit for a loan. For loans smaller than $150,000, you should have annual revenue of at least $120,000. For loans over $150,000, you should have annual revenue of about $300,000.
Your business also needs to be healthy, with no bankruptcies and a clean record when it comes to meeting debt obligations.
Slightly higher fees
Getting an SBA loan directly from a traditional bank would help you save on financing costs. SmartBiz takes a 4% cut from the approved loan to cover “referral and packaging fees” and passes on bank closing costs to the borrower. Those bank closing costs usually add $317 and would include standard bank fees, according to SmartBiz.
You still have to get the SBA’s OK
SmartBiz has found a way to speed up the process of applying and getting approved for an SBA loan. But you still need to meet the SBA’s requirements, which can be intimidating. The SBA even has a list of the types of small businesses that shouldn’t bother applying; they include businesses involved in religious teaching, life insurance, mortgage servicing and real estate development.
‘Fast’ is relative
Even though SmartBiz has streamlined the SBA loan process, approval typically takes longer than it might at other online small-business lenders, some of which don’t require the same amount of documentation SmartBiz does.
Here are 10 documents to gather before applying to SmartBiz:
- Business tax returns for the past two years
- Personal tax returns for the past two years
- Evidence of business property insurance
- Evidence of general liability insurance, such as a homeowner’s insurance policy
- Business entity certifications, such as articles of incorporation
- Business assets list
- Corporate resolution to borrow
- Photo of driver’s license
- Deeds, title policies or lease agreements for all real estate owned or used by the business. Lease agreement would include a subordination release from your landlord
- Home mortgage statement
Compare business loans
If you’d like to compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.