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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:
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 817-730-4453 or by downloading our Billing Change Form and sending to us in one of the following ways:
The regulations for plans with fewer than 100 participants require the deposit to be made by the earlier of two timeframes:
If a participant defaults on the loan, the entire unpaid balance becomes a taxable distribution.