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Veteran Advantage SBA Loan program

We don’t always realize or appreciate the important work many veterans assume after they leave military service. Many start small businesses, creating jobs and opportunities for their families as well as for others. In fact, just shy of 10% of all small businesses are owned by veterans and vets are 45% more likely to be self-employed than non-veterans. I know, I am a veteran

As a veteran, (I am a veteran) you may be eligible for reduced fees (as little as zero!) for one of these loans.

Under the Veterans Entrepreneurship Act of 2015, up-front guaranty fees for SBA Express loans approved on or after October 1, 2015, through September 30, 2016, are set to zero for qualified businesses owned by a veteran and/or the spouse of a veteran.

And under SBA Veterans Advantage, fees for many 7(a) loans (other than SBA Express) approved through September 30, 2016, are reduced by up to 50%. Specifically:

The up-front guaranty fee for 7(a) loans (other than SBA Express) of $150,001 up to and including $5,000,000 approved to qualified small businesses (see below) will be reduced by 50%, as follows:

For loans with a maturity in excess of 12 months:
For loans of $150,001 to $700,000: 1.5% of the guaranteed portion;
For loans of $700,001 to $5,000,000: 1.75% of the guaranteed portion up to $1,000,000 PLUS 1.875% of the guaranteed portion over $1,000,000;
For loans with a maturity of 12 months or less: 0.125% of the guaranteed portion.
These fee reductions are available to businesses that are at least 51% owned and controlled by one or more owners who are in the following groups:

Veterans (other than dishonorably discharged);
Service-Disabled Veterans;
Active Duty Military service member participating in the military’s Transition Assistance Program (TAP);
Reservists and National Guard members; or
Current spouse of any Veteran, Active Duty service member, or any Reservist or National Guard member;
or widowed spouse of a service member who died while in service or of a service-connected disability.
What are the interest rates on these loans?

Interest rates may be fixed or variable, but they cannot exceed the rates allowed by the SBA. Because the SBA ensures a significant portion of the loan, rates are often lower than those available elsewhere.

I am a vet and want to start a business. Where can I go for training and assistance?

A great place to start is with your Veteran’s Business Outreach Center. The mission of the VBOC is to “help create, develop, and retain veteran-owned small business enterprises.” VBOC’s provide training, counseling and mentoring and can help with creating a business plan, developing a feasibility study and more.

Your local Small Business Development Center is another terrific resource. And the SCORE Association, supported by the SBA, offers thousands of volunteers around the country who can help.

I am a service disabled vet, and my credit isn’t perfect. Will that stop me from getting a loan?

Don’t automatically assume you can’t qualify. You will generally need a minimum FICO SBSS score of 140 to pass the initial screening for loans under $1 million, however, so it would be a good idea to check that score as soon as possible. Currently, the only place to get this score is through Nav’s premium plus service.

What do I need to qualify for an SBA 7(a) loan?

There are some basic requirements that you—and any other owners with a 20% or greater ownership in the business—must meet to be eligible for an SBA loan.

You must operate (or plan to operate) a for-profit small business in the U.S or its territories.
You should have “skin the game.” By that, we mean lenders will want to see you have personally invested a reasonable amount in your business and tapped personal resources, if available.
The government doesn’t want to fund a business that hasn’t paid it back. In other words, you can’t be delinquent on other debts owed to the federal government such as federal taxes or federally guaranteed student loans. You also cannot have previously caused the federal government to incur a loss on a debt.
Your business can’t be in an industry that is not eligible for these types of loans, such as gambling or pyramid schemes. (Tip: Check that your SIC and/or NAICS code reported on your business credit reports is accurate. These codes categorize your business by industry.)
You won’t be eligible if you are currently incarcerated, on parole, on probation or a defendant in a criminal proceeding.
Do you qualify for an SBA loan? Check both your personal and business credit scores www.nav.com for your personal and FICO SBSS business score. SBA requires a minimum SBSS score of 140, most lenders set the score at 160.

Prepare Your Paperwork

Gathering and preparing the documentation many lenders will want to review when you apply for your loan.can be challenging. The SBA lists the loan document requirements on its website, but here is a summary:

SBA Loan Application
Personal Background and Financial Statement
Business Financial Statements (Profit & Loss, 1-year projected financial statement)
Ownership & Affiliations
Business Certificate/License
Loan Application History
Income Tax Returns (3 years, personal and business)
Resumes for each principal of the business
Business Overview & History, including an explanation of how the loan will help the business
Business Lease (if applicable)
Purchase Information (if purchasing a business, additional information is required)
Getting a loan can be complicated, and most get turned down for lack of proper documentation or missing information not because you were not qualified. As a general rule, once you are turned down by one lender the chance of getting approved by another is very small.

At Lendingcapital we make all this easy and have many approved preferred SBA lenders with our national reach. We have the ability to submit to many lenders without affecting your credit or alerting that we are shopping the loan. Your chances of approval with us increased dramatically so why not let us do the work for you and make sure your submittal package is correct the first time. Get approved today.

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What is the FICO® SBSS℠ Score? And why you need it for business loans

Small Business Scoring Service, (or FICO® SBSS℠ score) is one of the three main business credit scores. It’s the one credit score all business owners should know, but many have never heard of it because, until now, it’s been hard to get your hands on it. Banks aren’t required to disclose that they use the FICO® SBSS℠ score and very little information exists about it online. More lenders are using it because it helps them make faster, more accurate lending decisions. This means they can make decisions in hours, not days.

In fact, the U.S. Small Business Administration (SBA) now uses the score to pre-screen it’s most popular 7(a) loans. If your score falls below their minimum threshold, you may not qualify for one of the most attractive—lowest interest rates—small business loans available. Starting at the beginning of 2014, all SBA 7(a) loan applications up to $350,000 are required to go through a business credit score pre-screen. To be clear, if you’re applying for an SBA loan, most likely it’s a 7(a).

Here’s how SBSS works:

  • SBSS scores can be used for term loans and lines of credit for amounts up to $1 million. If you’re applying for $1 million or less, chances are your lender will use SBSS to help make its decision.
  • Like personal credit scores, FICO SBSS rank-orders small businesses by their likelihood of making payments on time. The FICO score ranges from 0 to 300. The higher the score, the better.
  • The minimum score to pass the SBA’s pre-screen process is currently 140. But most lenders set their minimum score at 160.
  • The scoring is based upon personal and business credit history and other financial information. A strong history of business credit with timely payments to vendors and suppliers may help boost your SBSS score.
  • If you have derogatory or no credit history, it can take months or even years of positive credit activity to move your SBSS score significantly higher. It’s vital to build your credit and ensure it’s healthy before you need it.
  • Because businesses are not covered by FCRA protections, you can be denied business financing due to your SBSS score, and lenders are not required to notify you of the reason why.

How is the credit score calculated?

The short answer is the score is calculated by looking at personal and business credit history, as well as other business financial information, like the age of the business, the number of employees, financial data, such as revenue and assets. It truly is a global view of a business’s overall financial health!

If you have no business credit history and limited time in business, the highest possible FICO SBSS score you can get is 140. But to do so, would require pristine personal credit.

Banks and lenders can set up the SBSS model in many different ways, putting more weight on certain information, and less on others.

For example, it can put more weight on your business credit profile or more on your personal. It’s also a very “smart” business credit scoring model because it will automatically go from one business credit bureau to another, in whatever order of priority the lender prefers, until it’s able to generate a score.

So, if the lender prefers checking the Experian Intelliscore (business credit) as the default, the SBSS pulls in the Experian data set. If that report doesn’t offer enough information, it will automatically check another business credit score, like the D&B PAYDEX score. It could also then move on to your Equifax business credit data. If there’s not enough business credit data available, it will just use the personal credit data to calculate the SBSS score, along with your business financials.

Who uses the FICO SBSS score?

SBSS scores can be used for term loans and lines of credit for amounts up to $1 million. The FICO SBSS score is used by over 7,500 lenders nationwide to help them make lending decisions. Large banks include KeyBank, Huntington National Bank, PNC, RBC, USBank, Zions Bank, HSBC, Santander Bank.

The SBA uses it to pre-screen. The cutoff is 140. Banks will use it to pre-screen their loan applicants but they usually set their cutoff higher, typically around 160. If your score falls below that, they will look at your business as too much of a risk. Plus, banks don’t want to waste their time filling out lengthy SBA loan applications if they are confident you’ll get denied because of a low FICO SBSS score.

How can I improve my FICO SBSS score?

You can take steps now to start improving your FICO SBSS score, you need to take care of your personal credit and start building business credit. www.Nav.com  will help you take steps to improve both personal and business credit in one spot.

Lastly, you may just need time: Time to show solid business financial history that makes your business a less risky and better odds at obtaining the loan you need. Remember, banks and lenders do not like surprises, lack or false information, incomplete applications, or missing documents like personal financial statements and so on.

Read our loan 101 on our website…

Be prepared, be informed, be ready…get funded