SBA Loans are among the most popular small business loans on the market. Everyone from Ace Hardware To Maui Brewing Company has reportedly used SBA Loans to move forward with vital, growth-related initiatives and investments. While traditional SBA Loans can certainly be very advantageous, they only work for certain types of businesses in certain types of situations. And the requirements for approval are notoriously stringent. This is why in 2016, United Capital Source began offering our own take on this business funding program that we call SBA “Marketplace” Loans. These innovative business loans are vastly different from traditional SBA Loans but there are some commonalities.
Like our other business funding programs, the primary purpose of SBA Marketplace Loans is to increase accessibility. Despite the SBA’s ongoing pledge to help more small businesses, far too many applicants are rejected. Here are four differences between traditional SBA Loans and UCS’s SBA Marketplace Loans:
1. SBA Marketplace Loans Are Much Easier To Obtain
Let’s start with approval and distribution processes. Traditional SBA Loans are only available to applicants with perfect credit scores, whereas our SBA Marketplace Loans are typically available for applicants with a FICO score of at least 650. Traditional SBA Loans require collateral and a personal guarantee, none of which are necessary for SBA Marketplace Loans. Since traditional SBA Loans are accessed through banks, applicants must compile significant paperwork, on top of a detailed business plan. Paperwork for SBA Marketplace Loans, on the other hand, is minimal, and detailed business plans are not mandatory for all applicants.
After completing the application for a traditional SBA Loan, you must wait at least two months to learn whether or not you’ve been approved. It will likely take even longer (up to 120 days to be exact), for funds to reach your bank account. This is just as ridiculous as it sounds. Our SBA Marketplace Loans can be approved and distributed in less than 2 weeks in some cases. Please note that this speed of service is not just reserved for our wealthiest or most qualified borrowers.
2. SBA Marketplace Loans Can Be Used For Almost Anything
Small loans are not a cost-efficient way for banks to make money, which is why most of them do not approve SBA Loans for less than $200,000. The SBA does offer a micro-loan program but you will likely have to put up at least some collateral and fulfill other requirements from the previous section. There are countless differences between UCS and banks, but foremost is that we are not in this business to earn a profit. We do not design terms with the goal of being paid back as soon as possible. Our SBA Marketplace Loans can therefore amount to as low as $30,000 and be used for a wide variety of purposes, as opposed to only large scale investments.
Examples of potential functions include increasing staff, developing a new product, or launching a marketing campaign. You could even use SBA Marketplace Loans to stay current on bills during a rough patch or pay off other outstanding debts.
3. SBA Marketplace Loans Carry Flexible Terms
As you probably expected, terms for SBA Marketplace Loans are much more convenient than traditional SBA Loans. The latter option gives you just 12-18 months to pay off the debt in full, whereas the former gives you up to 25 years. Interest rates for traditional SBA Loans are among the lowest on the market, but ours are even lower; starting at approximately 6.25%. Both options have repayment systems similar to standard business term loans. You make payments each month, but unlike the bank, UCS is able to work around inevitable or cyclical dips in revenue. Certain circumstances, like seasonality, might make payments for one month lower than another.
Businesses with tumultuous cash flow probably shouldn’t bother applying for traditional SBA Loans in the first place because they will most likely be rejected. But at UCS, we frequently lend to businesses of this nature. If an SBA Marketplace Loan isn’t in the cards, we may be able to approve another business funding program that will help you achieve more requirements for your first choice. And once you pay off that first business loan, you will most likely be eligible for a second business loan with terms more along the lines of what you were initially looking for.
All The Advantages You Know + Accessibility
The looser qualifications and rapid approval for our SBA Marketplace Loans allows them to be used for unexpected opportunities or emergencies. We are well-aware that for many industries, cash flow for the not-so-distant future is hard to predict. They don’t know when they’ll suddenly need so much money that they might not be able to pay their employees or fund day-to-day operations immediately afterwards. If an SBA Loan is the most sensible solution, these businesses can now get the large funding amounts and convenient interest rates that were previously only available for borrowers with 120 days to spare. And remember: we are not a bank, so if you have questions about terms or qualifications, one phone call is all it takes.