The financial crisis of 2008 saw many small businesses struggling as big banks suddenly lacked the capacity to equip small businesses with the necessary funds to develop and grow. SmartBiz was founded in 2009, in the wake of this crisis, to address the needs of small businesses that needed funding even as banks struggled. Back then, the best options for small business loans were so-called “alternative lenders” that issued loans at high APRs up to 150%. SmartBiz, a company that describes itself as “the white knight in small business lending”, does not actually issue loans itself. Instead, the company has come up with a way of efficiently pairing clients with banks that are most likely to grant funding. Using efficient proprietary matching technology, SmartBiz can quickly determine whether a small business is eligible for an SBA loan and which lenders are most likely to issue the loan. This system streamlines the application process and can save clients a lot of time they might otherwise have spent on futile applications.
It is important to note that SmartBiz offers business owners bank loans only, most of which have very strict minimum requirements. If your business is eligible for an SBA loan or other bank loan, SmartBiz can help you streamline the application process. If you are looking for a private funder or if your business is facing financial difficulties, another lender may be a better fit for you.
SmartBiz helps small businesses get one of two distinct loan offerings. You can opt for a standard SBA 7(a) Working Capital or Debt Consolidation Loan ($30,000 to $350,000) with a term length of 10 years. This option is great if you are planning to grow your business or if you are looking for a way to refinance high interest debt with a competitively priced SBA loan.
If you are interested refinancing your commercial real estate mortgage or in buying real estate to expand your small business, an SBA 7(a) Commercial Real Estate Loan ($500,000 to $5 million) might be an interesting option for you. With a repayment term of 25 years and interest rates ranging from 6.75% to 8.00%, these are some of the most competitively priced loans available for small businesses.
SmartBiz also offers a non-SBA option for customers who do not qualify for an SBA loan or who are looking for quick loans with shorter repayment terms. Non-SBA loans ranging from $30,000 to $200,000, 2-5 year repayment terms and fixed interest rates from 7.99% to 24.99% are mentioned on the SmartBiz website.
Interest rates at SmartBiz are variable and depend on the product you choose as well as on the amount borrowed.
The interest rates for working capital and debt consolidation loans are 8.00% (prime rate plus 2.75%) for loans of $50,000 – $350,000 and 9.00% (prime rate plus 3.75%) for loans of $30,000 – $49,000. Other fees include a one-time referral fee and a packaging fee of 2% each, which will be deducted from your loan. Additionally, you will be charged a one-time fee of about $450 for bank closing costs. This type of loan does not have prepayment penalties, meaning that you can repay your loan early without being charged interest for the full 10-year term.
Let us have a look at a simple example: if you borrow $30,000, your monthly payment will be $380 with an interest rate of 9.00% and an overall APR of 10.34% for a loan term period of 10 years. If you borrow $300,000, your monthly payment will be $3,639 at an interest rate of 9.00% and an overall APR of 9.54%.
To get a quick overview of the overall costs you are going to incur when choosing this product, you can check out the Working Capital Loan Calculator.
If you are interested in commercial real estate loans offered by SmartBiz lenders, the interest rate will range from 6.75% to 8.00% (loans have a fixed rate of prime rate plus 2.00% to 2.75% *or a variable rate of 1.50% to 2.75%) for loans ranging from $500,000 – $5 million. For this product, the referral and the packaging fees are 0.5% each. Bank closing costs for this product will typically add $5,000 to your costs. This type of loan does involve a prepayment penalty for the first 3 years: you will be charged 5% if you pay back your loan within the first year, 3% for the second, and 1% for the third year.
If, for example, you borrow $500,000, your monthly payment will be $3,454. The interest rate of your loan will be 6.75%, with the overall APR at 7.13% over a loan term period of 25 years. If you borrow $2,000,000, you will be looking at a monthly payment of $13,818 at an interest rate of 6.75% and an APR of 7.17%.
Use the Real Estate Loan Calculator to get a quick estimate of the fees you are likely to incur.
SmartBiz also offers a non-SBA option for those customers who do not qualify for an SBA loan or who are looking for fast funding with shorter repayment terms. These loans, ranging from $30,000 to $200,000, have repayment terms from 2-5 years and fixed interest rates ranging from 7.99% to 24.99%. There are no prepayment penalties for these loans.
Depending on the loan type and the size of the loan you are interested in, SmartBiz has two different sets of qualifications that must be met. If you are interested in a working capital or debt consolidation loan ranging from $30,000 to $350,000, your business must be older than 2 years and your personal credit score must be 600 or higher. You will be asked to show that you have no outstanding tax liens and that you have not experienced bankruptcies or foreclosures in the past 3 years.
If you are looking at the commercial real estate loans which range from $500,000 to $5 million, the borrower qualifications get a bit stricter. The required minimum time in business is still 2+ years but the required credit score must be 660 or higher. Your real estate must be majority owner-occupied, meaning that at least 51% of the square footage of the property you are buying must be occupied by and used by your business. Also, you will be required to show sufficient personal and business cash flow by providing 3 years of tax returns and interim financial data. Furthermore, a personal guarantee must be provided by all clients who own 20% or more of the business. Married couples whose combined share is 20% or more must each provide a personal guarantee.
On its website, SmartBiz states that most small businesses who have been approved for an SBA loan can show $50,000 to $5 million in annual revenues. It is worth noting that the borrower qualifications for SBA loans are not set by SmartBiz but are dictated by the government which provides the backing for the loans.
Most industries are eligible for loans with SmartBiz. Some of the industries that are not eligible include businesses involved in gambling, life insurance, religious teaching, political and lobbying activities, real estate development, pawn or private clubs, to name a few. This is typical for all SBA loan providers.
Thanks to the streamlined application process, SmartBiz can determine whether you are eligible for an SBA loan with a few minutes. This saves you the hassle of applying to various banks without knowing whether you are likely to be issued a loan at all. All you need to do to find out whether you are eligible is spend a few minutes on filling out a questionnaire on the SmartBiz website. Once the initial decision is made, however, the application process can get a little lengthy. Depending on the size of your loan, you will be asked to provide a range of documents, and the length of your application period will largely depend on how fast you can get your paperwork in order. Among the documents you will need are tax returns (both business as well as personal tax returns), bank balances, and incomes statements. Other financial documentation may be requested.
SmartBiz will first perform a soft pull on your credit, which will not impact your credit score. Further on in the process, once you are paired up with a loan provider, SmartBiz will perform a hard pull on your credit which may have an effect on your credit score.
One of the best features we discovered during this SmartBiz review is the company's helpful team of representatives: after a positive decision regarding your eligibility, you will be paired up with a personal “relationship manager” who will accompany you through the application process and will be a go-to person for any questions that may arise.
In a world where customer support is not always as professional and competent as you would like it to be, SmartBiz certainly stands out. The idea behind the company’s customer service approach is that client support should be professional as well as personal. Having a “relationship manager” who is there to provide help and support during the application process is very helpful. Customer reviews often mention the company’s competent reps who significantly facilitate the application process.
The SmartBiz website offers a clear and helpful FAQ which addresses a variety of questions that may arise. The website also offers a range of helpful resources including articles on topics related to small businesses as well as a blog.
Many positive reviews mention the streamlined application process which makes applying for a loan much more comfortable compared to applying for traditional bank loans. The excellent customer support is also mentioned frequently, with SmartBiz representatives acting as professional mediators between SmartBiz clients and banks. Some clients complain that applying for small business loans through SmartBiz takes too much time, despite the streamlined process SmartBiz prides itself on.
Those who qualify for a SmartBiz loan will get a pretty good deal, and we were happy to see during this SmartBiz review that the company’s fees and rates beat many other competitors on the market. However, since the eligibility requirements are rather strict, SmartBiz is certainly not for everyone. Young small businesses, for example, will have a hard time meeting the steep revenue requirements.
An issue that pops up in user reviews every once in a while is the somewhat lengthy application process. Despite the streamlined method that matches applicants with lenders who will likely grant funding, applying for the bank loans that SmartBiz offers requires you to provide a vast range of documents that you may not be able to obtain quickly. Still, with excellent rates and top notch customer service, SmartBiz could be a great fit for any small business that qualifies for a bank loan.