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The Pre-qualification Loan Program
was developed to promote the SBA's business loan program top current and
prospective small business owners. It also provides specialized support and
assistance with the SBA's loan application process. This program uses non-profit
organizations such as us as intermediaries to assist prospective women,
minorities, veterans, rural and export borrowers in developing a viable loan
application package. That application can be submitted directly to the SBA for
consideration of a loan pre-qualification. On approval we can assist the
applicant in locating a competitive lender.
The Pre-qualification Loan Program focuses primarily on the applicants character,
credit, and apparent ability to repay the loan from earnings. Loans under this
program are limited to $250,000 or less.
Eligibility
Business must be at least 51 % owned, operated and managed by a women, minority, veteran, are rural or exporters. The average annual sales for the preceding three years must not exceed $5 million. they must employ less than 100 persons, including any affiliated companies.
Preparation
The business owner works directly with us to prepare a business plan and complete a pre-qualification loan application.
Submission
We review the credit information, perform a loan analysis and submit the application to the SBA.
Review
The SBA reviews the completed application to determine whether it meets the requirements for a guaranteed loan and makes a decision regarding loan pre-qualification.
Qualification
If the SBA approves the application, they issue a pre-qualification letter. This letter states the SBA's intent to authorize a loan guaranty.
Lender Selection
When an applicant receives the SBA's pre-qualification letter, we can assist the borrower in locating a lender offering the most competitive loan interest rates.
Interest Rates
Applicants negotiate terms with the lender. Interest rates are tied to the prime rate and may be fixed or variable; however they cannot exceed the following maximums established by the SBA
For loans of less than 7 years, the rates may be up to 2.25% over prime.
For loans of 7 years or longer, the rate can be up to 2.75% over prime.
Loans under $50,000 may be subject to slightly higher rates.
Maturity
The length of time for repayment depends on the ability to repay and the use of the loan proceeds. Generally, loan maturities will be between 5 and 10 years for working capital loans. Loans may be from 10 to 25 years on machinery and equipment, depending on the useful life of the equipment. Loans will be up to 25 years for real estate construction or purchase.
Collateral
Primary criteria for a pre-qualification loan, is the ability to repay. a good business plan, and good credit. Normally, business assets will be pledged, and personal assets when warranted. However, loans will not be declined where inadequate collateral is the only unfavorable factor.
All owners of 20% or more of the business are required to personally guarantee the loan.
Equity
The applicant must have a reasonable stake in the business.