Note: This article is the last in a three-part series on the popular alternative business lender, SmartBiz. If you missed it, check out the first piece in the series on the application process or the second piece on the underwriting process.
For business owners in the market for an SBA loan between $30,000 and $350,000, alternative funding provider SmartBiz could be the answer. After the application and underwriting steps have been completed, you’ll receive a personalized loan offer over email—congratulations! Here are a few tips on how to make sense of your SmartBiz loan offer.
Once a loan has been underwritten, a borrower’s application is either declined or approved—and a loan offer will arrive. One of the nice things about SmartBiz is that your chances of being declined after the underwriting stage are reduced, thanks to a “pre-qualification” process early on in the application process.
Once your loan offer arrives, review it carefully and make note of any questions you have. Your relationship manager—who probably already made contact with you over email or phone during the application and underwriting steps—will be available to clarify anything you’re unsure about.
“SmartBiz Relationship Managers provide each borrower one-on-one ‘concierge service’,” says Judy Balint, CMO at SmartBiz. “They support borrowers throughout underwriting by phone and email to make the process as smooth and easy as possible.”
Though the time gap between applying and receiving your offer varies depending on a number of factors, the quicker you submit the required loan documentation prior to underwriting, the faster you’ll receive your offer—and your money. And from start to finish, some SmartBiz loans fund in under 7 days from application, with most taking no longer than 2 weeks. With loans of more than $151,000, you’re more likely to wait for 4 to 6 weeks.
A SmartBiz offer contains the following sections.
No surprises here—this is the total amount you’re borrowing.
The amount you’ll pay each month on your loan. When reviewing your SmartBiz loan offer, Balint says to pay particular attention to this amount, as well as to your rate.
“Borrowers should compare SmartBiz payments to other options to see how much SmartBiz can save them each month,” she says. “SmartBiz Loans typically have some of the lowest monthly payments on the market.”
SmartBiz’s 10-year loan term leads to lower monthly payments than many of its competitors, and there’s no prepayment penalty for paying your loan offer early.
Currently, SmartBiz loans are offered at 7.25% (prime rate + 3.75%) for loans between $30,000 and $50,000, and 6.25% (prime rate plus 2.75%) for loans between $51,000 and $350,000.
As SmartBiz places your loan with an SBA-approved lender, it currently charges a one-time referral fee of 2% of the loan amount, as well as a loan packaging fee of 2% of the loan amount. There are also bank closing costs that typically cost about $317. In some cases, there might be additional bank fees, too.
It’s important to note that these fees get deducted from the total loan amount, resulting in the “disbursed amount less fees” section. This is the actual amount of money that will be advanced to you as a borrower.
The Annual Percentage Rate (APR) shows the actual annual interest rate you’re paying for this loan, taking into account all of those additional fees. This figure is important when comparing loan offers precisely for that reason—because it takes into consideration the various additional charges and fees accompanying the loans, instead of just focusing on the basic interest rate. In other words, it lets you compare apples to apples.
Once you’ve received your loan offer, it’s best to make a borrowing decision as soon as you can.
“Although there is no specific time limit on acceptance, if a borrower waits too long, the required SBA loan documentation may need to be updated and a new credit report pulled,” says Balint. “As a result, the credit decision may get changed.”
Once you’ve decided to go ahead with your SmartBiz loan offer, it’s time to sign on the dotted line. You’ll either electronically sign the digital loan documents and send them back to SmartBiz electronically or your Relationship Manager will connect you with a notary to arrange a signing.
From start to finish, SmartBiz does a great job of simplifying what many have seen as an arduous process—applying for an SBA loan. At the same time, SmartBiz offers competitive pricing in the online lending market.
“SmartBiz believes small business owners shouldn’t have to settle for sky-high rates from alternative online lenders or clunky processes that banks use today,” explains Balint. She says that, instead, SmartBiz wants to provide the best of all worlds: loan offers with low 6.25% to 7.25% bank rates, 10-year terms that result in low monthly payments, no prepayment penalties, and funding in as little as 7 days after an application is completed online.
These features, plus the additional “concierge service” provided by the SmartBiz Relationship Managers, are why SmartBiz is proving to be a leader in the online lending market.