If you’re a borrower who wants an SBA loan fast, a low-doc SBA loan could be the ideal solution. Unlike typical SBA 7(a) loans, which may require up to 2-3 months to be finalized, low-doc loans can be completely finalized within 45 days (or even sooner.) Low-doc loans offer borrowers between $25,000 and $150,000, which can be used to fund inventory, equipment, and working capital for small businesses.
How Can I Get Approved for a Low-Doc SBA Loan?
First, to get approved for a low-doc SBA loan, you’ll have to find a lender that does low-doc loans. Many, but not all SBA lenders offer these loans. Next, you’ll have to make sure you have good enough credit (typically 690+); since low-doc loans require less overall documentation from borrowers, they often require much higher credit scores.
For low-doc loans less than $50,000, borrowers can use a streamlined application process that only involves a single, one-page form. For loans between $50,000 and $150,000, borrowers need to submit both the one-page form and individual income tax returns for the last three years. Financial statements from all co-owners and guarantors of the company are also required. However, individual lenders often require additional paperwork to satisfy their requirements.
Equity, Collateral, and Franchise Requirements for Low-Doc SBA Loans
There is no specific amount of equity that a borrower is required to have (though some lenders require 10% down), and borrowers may not need to have collateral equal to the full amount of the SBA loan in order to get approved. In fact, some lenders may not require any collateral for a low-doc loan. If a borrower is getting a low-doc SBA loan for a franchise, they will need to have paid all relevant franchise fees before applying for the loan.