What is a Low-Doc SBA Loan?
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
Better Financing Starts with More Options$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get QuotesIf 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.
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Related Questions
What are the requirements for a Low-Doc SBA loan?
A Low-Doc SBA loan does not require a specific amount of equity, and borrowers may not need to have collateral equal to the full amount of the SBA loan in order to get approved. 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.
What are the advantages of a Low-Doc SBA loan?
The main advantage of a Low-Doc SBA loan is that it requires less documentation than a traditional SBA loan. This makes it easier and faster to get approved for the loan, as the lender does not need to review as much paperwork. Additionally, some lenders may not require any collateral for a Low-Doc SBA loan, which can make it easier for borrowers to get approved. Finally, for loans less than $50,000, borrowers can use a streamlined application process that only involves a single, one-page form.
What are the disadvantages of a Low-Doc SBA loan?
The disadvantages of a Low-Doc SBA loan include:
- Higher credit scores are typically required (typically 690+)
- May be restrictions on supplemental/additional financing
- Certain businesses, including real estate investing, lending, gambling, and speculation are prohibited
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.
What types of businesses are eligible for a Low-Doc SBA loan?
Low-Doc SBA loans are available to most types of businesses, including sole proprietorships, partnerships, LLCs, and corporations. The business must be for-profit and must meet the SBA's size standards. The business must also be located in the United States and must be able to demonstrate a need for the loan.
How long does it take to get approved for a Low-Doc SBA loan?
The length of time required for a Low-Doc SBA loan to be approved can vary drastically, but averages between 60 and 90 days. With that being said, it may take up to six months in some situations. Factors that go into determining the length of time to loan approval include:
- Your ability to gather all required information
- Your ability to satisfy all lender requirements for information and proof of income
- SBA approval (up to 7 days)
- Due diligence (2 to 3 weeks)
- Closing (up to 14 days)
For more information, please see Low-Doc SBA Loans and SBA 504 Loan Approval Times.