SBA Loans & Financing | M&T Bank (2024)

FAQs

Does SBA look at bank statements? ›

Both your personal and business credit reports, income tax returns and bank statements will be reviewed.

SBA Express loans, part of the SBA's 7(a) loan program, offer the easiest application process and the fastest approval times among all SBA loans. These loans, with payoff periods as long as 25 years, are designed for purposes such as refinancing debt, buying equipment, or improving real estate.

In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. Normally, businesses must meet SBA size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding.

Many statistics say that large banks approve SBA loans at rates as low as 20-30%, while smaller banks approve SBA loans at around 40% or less. All this to say: SBA loan approval rates hover at half or below all loan applications that are submitted.

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

The borrower typically provides the bank or mortgage company two of the most recent bank statements in which the company will contact the borrower's bank to verify the information.

SBA-qualified lenders usually set their own criteria when assessing your eligibility. Most lenders will require a minimum FICO score of 620 or higher for their SBA Loans.

Hard to qualify

Although the government guarantee reduces the risk that lenders face when issuing loans to small businesses, you'll still need to meet strict eligibility criteria to get an SBA loan. Typically, you'll need several years in business, strong business finances and a good credit history to qualify.

On average, most SBA loans take 30 to 90 days from applying to funding. 7(a) loan subtypes are backed directly by the SBA. The SBA's turnaround time is 2 to 10 business days, but approval from your chosen lender can take 30 to 60 days. Microloans are loans for smaller amounts of $50,000 or less.

What are SBA requirements? ›

Be small under SBA size requirements. Not be a type of ineligible business. Not be able to obtain the desired credit on reasonable terms from non-federal, non-state, and non-local government sources. Be creditworthy and demonstrate a reasonable ability to repay the loan.

Many SBA lenders require you to provide a down payment of at least 10% of the loan amount. Lenders often require you to put money down upfront because it shows you have an investment in paying the loan back, thereby reducing their risk of working with your business.

While you can get up to $5 million for a standard SBA 7(a) loan, most borrowers in 2022 took out just under a million dollars at $999,210. The average for all SBA 7(a) loans, including the Small Loan and Express programs, was $538,903. Express loans, which are limited to a $500,000 maximum, averaged $97,097 in 2022.

SBA loans are generally attractive to small business owners because of their guaranties and interest rate caps. However, drawbacks include long loan closing processes and collateral requirements.

All entities that own 20% or more of a borrower must provide an unlimited full guaranty. If the entity that owns 20% or more of the borrower is a trust (revocable or irrevocable), the trust must guarantee the loan with the trustee executing the guaranty on behalf of the trust and providing a certification of trustee.

Lenders assess loan applications using an underwriting process. It involves reviewing various documents containing personal and financial information. Bank statements are crucial in this process. Lending institutions request the last six months' statements, sometimes even a year's worth.

Post-Judgment SBA Garnishment

In most states, this requires that the creditor sues the business and that the court award the creditor a judgment. Once that judgment is received, the creditor can make garnishment actions against any known bank accounts of the debtor.

Your lender typically needs to verify your income to ensure that you have enough money coming in to make your monthly payments. They also check your account balance to confirm that you have enough money in your account to cover a down payment.

For start-up projects you'll need to provide two full years of assumptions, including a monthly breakdown of your revenue projections for the first year. If your business is an affiliate, you must provide the last two fiscal year-end financial statements and/or federal income tax returns of affiliates.