Yes, all SBA Express loans have to follow the same SBA rulebook, regardless of the lender. Although many lenders advertise an SBA Express program, most lenders actually submit those loans as SBA 7(a) Small Loans to get a larger SBA guaranty (up to 85% vs. 50% Express), as additional security since these typically do not require personal collateral. Also, since the SBA guarantees 85% up to a loan amount of $150K, and then it drops to 75% for loans from $150K to $350K, a lot of banks will cap their programs at $150K.

FranFund works with many banks who offer the Express Loan or 7(a) Small Loan programs; however, banks can be selective about the types of industries they work with, the number of startups they lend to, and the kind of business costs they cover. Because it is challenging for borrowers to find a bank that is a good fit for their specific franchise business, it is advisable to work with a lending consultant, like FranFund, who specializes in SBA loans for franchisees and can match you up to the right lender.

As a small business owner, banks look at both your personal credit score (FICO) and your small business credit score (SBSS) to determine your creditworthiness. If your personal credit score is lower than 680, you will need a good explanation and good liquidity/income. The SBSS scores a small business by its likelihood of making payments on time. You will need an SBSS score of 165+. A past bankruptcy, short sale, or judgment is not an automatic disqualifier, as long as it is at least three years old and you have re-established clean credit (680+). You must not have any outstanding, open collections or past due student loans, unpaid child support or tax liens.

If you have a business that has been operating for more than two years and is successful than no cash injection is typically required. For startups, you can expect to contribute 10-20% of personal funds, meaning you cannot use borrowed funds such as a HELOC (home equity line of credit) or personal loan. Funds from a 401(k)/IRA rollover can be used to satisfy this requirement.

A lien on your business assets will be used to secure the loan. No personal collateral is needed, but a personal guaranty is required from each owner with 20% or more ownership of the business, as well as spouses (if their assets and/or income is needed to qualify). A personal guaranty is an individual’s legal promise to repay the debt.

The business should be revenue ready within 60 days from generating revenue, which means these items need to be complete:

• Training certificate (required by some lenders)
• Signed franchise agreement and SBA franchise addendum
• Signed lease agreement (if applicable) and the bank’s landlord consent waiver
• Business licenses/permits required by State/County
• Business insurance
• Proof of equity injection (down payment)
• If the business includes buildout, there will be additional requirements

If all closing requirements listed above are complete, you can expect to get your loan funded in 5-10 business days, allowing time for SBA document completion, bank review and approval, and final signatures on the closing docs.

You can update your billing information by calling us at 817-730-4523 or by downloading our Billing Change Form and sending to us in one of the following ways:

• Secure portal:  email us at billing@franfund.com and request to send via our secure portal
• Email:  billing@franfund.com
• Fax:  817-546-7334
• Mail:  FranFund; 505 Main Street, Suite 200, Fort Worth, TX 76102.

The regulations for plans with fewer than 100 participants require the deposit to be made by the earlier of two timeframes:

• As soon as the amounts withheld from payroll can reasonably be segregated from the company’s general assets, or
• DOL created a Safe Harbor standard for smaller plans (less than 100 participants) that states any deposits made within 7 business days of a pay date are considered timely even if the deposits could have been made earlier.

• The term of the loan cannot exceed more than 5 years
• You must charge a reasonable interest rate
• You must make loan payments at least quarterly
• You are limited to borrowing the lesser of $50,000 or one-half of your vested account balance

If a participant defaults on the loan, the entire unpaid balance becomes a taxable distribution.

• Officers earning more than $180,000 annually
• Any employee owning more than 5% of the company (The IRS attributes ownership of stock owned by the employee and his or her spouse, parents, children or grandchildren)
• Any employee owning more than 1% and earning over $150,000 annually (not indexed)