The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). We can help you navigate the SBA disaster loan process through our network of preferred lenders.

  • The SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
     

  • These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
     

  • The SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
     

 

 

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Traditional SBA Business Financing is one of the most common forms of small business funding. Small business owners borrow $600 billion a year, according to the Small Business Administration.

In fiscal year 2019, the SBA approved 51,907 loans totaling $23.2 billion dollars with the average amount being $446,887. The proceeds were used to establish a new business, or to assist in the operation, acquisition, or expansion of an existing business.  Many small companies use debt financing to run their business. A survey by the Federal Reserve Bank found that 70% of small employers have some form of unpaid debt. With that said, most small businesses have an outstanding loan balance of less than $100,000. 17% of small businesses have $1 to $25,000 in debt, while 21% have $25,000 to $100,000 in debt.  Of those businesses that apply for debt financing, 56% of small businesses apply for funding to expand their business, pursue a new opportunity, or acquire business assets. This runs counter to the assumption that those businesses that seek debt financing are experiencing financial distress.

 

Traditional business financing is not for every business. While offered with the most favorable loan terms, they require better credit and financials, more time and resources to apply for, and processing time. For that reason, the average approval rate for traditional bank financing was 40% in 2017.

 

All is not lost for those small businesses that don't qualify for traditional bank financing. There are working capital loans and merchant cash advances and alternative forms of funding.

What is Traditional bank financing?

Traditional financing is a proven source of capital for many small businesses. It is also the most common form of debt financing used by small and mid-sized companies. Traditional financing offers some of the most competitive terms of all commercial lending options.

What are traditional loans used for?

Funds from traditional term loans are used for many purposes, including:

  • Start-up businesses

  • Business acquisition

  • Franchise financing

  • Construction

  • Purchase property

  • Inventory

  • Debt consolidation

  • Cash flow

  • Working capital

  • Build outs

  • Commercial mortgage

  • Expansion

  • Equipment and/or machinery purchase

  • Capital improvements

  • Payroll

  • Paying vendors

  • Upgrades

Traditional term loans

Traditional bank term loans are one of the most common forms of financing for small businesses. A traditional term loan is financing provided by a bank that is paid back over a fixed period of time.

Traditional bank loan terms are generally set between 1 to 25 years, depending upon use with monthly repayment. Term loans come in the form of a secured business loan but also on an unsecured basis. Unsecured business funding requires better credit and cash flow than secured financing.

 

Traditional lenders that offer term loans include community banks, credit unions, SBA lenders, and small and large banks.

Documents needed for term loans

Documents needed for term loans include:

  • Business tax returns

  • Income statements

  • Balance sheets

  • Debt schedule

  • Accounts receivable and accounts payable aging schedules

  • Main operating bank account statements

 

SBA Loans

SBA loans are bank-rate loans offered by traditional lending companies such as banks, credit unions, community development companies, community banks, and non-profit lenders that are administered by the U.S. Small Business Administration. The objective of the SBA loan program is to help encourage small business lenders to provide affordable financing to small businesses by assuming some of the lender's losses should a borrower default.

Documents needed for SBA financing

Documents needed for SBA financing, include:

  • Business tax returns

  • Financial statements

  • Accounts receivable and accounts payable aging schedules

  • Personal tax returns

  • Debt schedule

  • Personal financial statements

  • Various other SBA forms

 

 

Are you ready to move forward with getting the money

you need for your business?

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Interlink Funding, makes capital available to businesses through business loans made by Web Bank, member FDIC, and through Merchant Cash   

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