SBA LowDoc Loan

The program was created in 1993 for commercial loan applications of $150,000 or less and has a 90% success rate. Processing time for a typical LowDoc application is 36 hours or less.

SBA LowDoc Loan Eligibility Requirements

Your loan’s purpose must be for a startup or to expand an existing business. Your existing business cannot employ more than 100 people, including you as business owner, all partners and principals. Average sales for the previous three fiscal years can’t be more than $5,000,000. The business and its owners must have good credit, a good credit score and be of good moral character. “Moral” character usually means that the business is legitimate and that personal and business credit obligations have been made in a timely manner. Another important factor is the applicant’s management experience.

Terms

Interest rates can be fixed or variable and negotiated with the lender. They are capped at a set amount above prime rate as published in the Wall Street Journal and vary according to the loan amounts, but cannot exceed SBA maximums. SBA fee maximum is two percent.

Caps

Loans less than $25,000, the cap is 4.75 percent above the prime. Loans of $25,000-$50,000, the cap is 3.75 percent above prime. For loans of $50,000, the cap is determined by the loan maturity.

If the loan is at least $50,000, then the cap is determined by the loan maturity period. For loans less than seven years, the cap is 2.25% above prime. Loans of seven years or more, the cap is 2.75% over prime.

Maturity

Repayment time depends on the borrower’s ability to repay and how the funding is used. The normal period is 5-10 years. Fixed-asset loans can be up to 25 years.

Use of funding

Funds can be used for working capital, equipment and inventory purchases, construction, real estate purchase, and purchase of businesses.

Required SBA Paperwork Is Simplified

For loans of $50,000 or less: proof that the borrower was denied a loan from a conventional lender

Startups

Personal financial statement usually provided by the lender and personal IRS tax returns for the last three years

Projected startup estimates of costs

Two-year income projections

Cash flow projections for first 12 months

Proof of ownership assets such as leases and contracts

Collateral such as real estate or personal property

Business plan

Breakeven analysis

Existing Businesses

Previous three years of income statements and business balance sheets

Two-year projected balance sheets and income statements

12 months of projected cash flow statements

Personal and business tax returns for the previous three years

Business plan

Accounts receivable aging report

Personal guarantees from principals

Some Assembly Required

While the SBA LowDoc loan program streamlines the loan process, there are still some forms to be completed to satisfy the lender you’ll be working with. Some of these Adobe PDF forms can be found on SBA Forms Library Page. Many can be filled in and printed with downloaded Adobe PDF software offered free on the SBA site.

Get SBA LowDoc Loan Application Here

Get the application in a PDF file by clicking on this link: LowDoc application