Small businesses face enormous challenges, and the biggest one of them all is accessing capital. Are you among the many businesses facing this challenge?
Then, you are at the right place since Commerce Bancshares offers a wide range of beneficial SBA loans. Small businesses are an integral part of the country’s economy. Hence, it has become a lot easier to acquire this loan than you might assume.
These loans can be useful for many purposes, such as investing in inventory, equipment, or machinery. Moreover, it can help you launch or expand your existing business.
This article will shed some light on the small business loans Commerce Bancshares offers. Plus, you can get a better idea about the interest rates, fees, and more as you read on.
An Overview of Commerce Bancshares’s Loans
Commerce Bancshares is a bank holding company based in Missouri. It has approximately 300 branches and ATM locations across Colorado, Illinois, Missouri, Oklahoma, and Kansas. It is also the parent company of Commerce Bank that provides a diverse range of financial services.
Commerce Bank is an SBA designated Preferred Lender that has offered loans for numerous small businesses. They provide longer repayment terms, lower down payments, and competitive interest rates that can be advantageous to your business’s growth.
They offer about four types of SBA loans that can meet your financing needs. You can apply for any of their loans if you meet all their criteria at lower interest rates.
Types of Loans Offered by Commerce Bancshares
Before you go for an SBA loan, it would be best if you knew all the options at your hand. This section will shine some light upon the types of loans Commerce Bancshares offers.
The bank will always guide you with your plans before you commit to any of the loan types. Nevertheless, having an idea before you go in can help you a lot.
So, here are the types of loans Commerce Bancshares offers.
1. SBA 504 Program
This type of loan by Commerce Bancshares is designed for fixed-asset acquisitions, including equipment and real estate. If you are looking for the most suitable loan in terms of long-term benefits, this can be a good choice for you.
It also offers favorable fixed-rate financing and low down payments. Therefore, it will allow you to maintain liquidity that can help you grow more.
2. SBA 7(a) Program
SBA 7(a) program is the most suitable loan for small business expansion. You can use it for equipment purchases, commercial real estate, and business acquisitions. Further, it will help with fulfilling payroll.
You can consider this loan program for refinancing debt as well. However, the maximum loan amount you can borrow in this program is limited to 5,000,000 dollars.
3. SBA Express
Next up, Commerce Bancshares offers loans of up to 35,000 dollars. However, it provides less complex loan terms and conditions. The value of the SBA Express loan lies in its remarkably fast time for approval and its less documentation.
You can consider this loan if you do not have an outstanding credit history. Furthermore, this can be an excellent choice for business owners who do not meet the lending criteria of traditional financial institutions.
4. SBA Export Working Capital Program
SBA Export Working Capital Program has a design that helps businesses with exports. Small businesses can use this loan to fund all kinds of export transport transactions. It can range from purchase orders to procurement.
The loan amount can go up to 5 million dollars. Moreover, it has a quick processing time and a low guarantee fee. You can consider applying for this loan even if your business has export potential and is not exporting yet.
What Lending Criteria Does the Bank Have?
Previously, it was easy to procure loans, but with SBA, it is a lot easier now. However, there are still many criteria you and your business have to meet to be eligible for the loan.
Below are some pointers that can help you comprehend the eligibility criteria at Commerce Bancshares better.
- Your business size should fall within the SBA
- The business operates for profit
- It should not be non-profit organizations such as religious or charity works
- Works within the USA
- Has utilized all resources in the business or personal reach
- The business has equity to invest
- It should not be an academic school
- The organization should not be a pyramid scheme sales plan
- Should not be anything related to gambling activities such as casinos, race tracks, or other betting areas
Commerce Bancshares’s Interest Rates, Fees, and Loan Options
It is important to be aware of the interest rates before you commit to any type of loan. Although all banks will inform you before the processing, not all banks will publish the interest rates.
Similar to all types of loans, the interest rate for SBA loans also depends on their size and term. Nonetheless, you can negotiate with the bank and bring down the interest rates if possible. So, here is a breakdown of interest rates to help you with the entire process.
SBA 504 Program Interest Rates
- For loan amount up to 5.5 million dollars - 10 years period - about 2.231%
- Up to 5.5 million dollars - for 20 to 25 years plan - anywhere between 2.364% to 2.399%
SBA 7(a) Program Interest Rates
- Loan amount under 25,000 dollars - over 7 years period- prime rate +4.75%
- Between 25,000 to 50,000 dollars - over 7 years - prime rate +3.75%
- Loan amount over 50,000 dollars - over 7 years - prime rate + 2.75%
- Under 25,000 - under 7 years period - prime rate + 4.25%
- Between 25,000 and 50,000 dollars - under 7 years - prime rate + 3.25%
- Loan amount over 50,000 dollars - under 7 years - prime rate + 2.25%
Interest Rates for SBA Express
- For loan amounts up to $350,000 - up to 7 years - prime rate + 4.5% – 6.5%
SBA Export Working Capital Program
- For loan amount up to 5.5 million dollars - for 10 years - 2.231%
- Loan amount of up to 5.5 million dollars - for 20 to 25 years - ranges from 2.364% to 2.399%
The interest rates do not account for the fees that the bank and the SBA will charge you. The fees can change the annual percentage rate or total annual cost of the loan.
Additionally, you may have to pay a guarantee fee based on the loan amount and terms. However, in some cases, the bank might pay it for you. The fees in Commerce Bancshares can range anywhere between 2% to 4% on a guaranteed amount of over a million dollars.
This bank can also charge you other fees such as credit check fees or application fees. Overall, it will cover everything, including packaging fees and closing fees.
Commerce Bancshares’s Application
The application process for an SBA loan program at Commerce Bancshares is similar to the SBA loan process of other banks. You can start by collecting the required documents to ensure the process goes smoothly.
The bank will submit the details to the SBA once they process it, so make sure to give all the right information. Fill the application form for the selected SBA program. Provide accurate personal and financial information that adheres to the most recent government documents.
Below are the things you should gather and work on before applying for a small business loan at Commerce Bancshares.
- Business certificate or license
- Business Financial Statements that will demonstrate your business’s ability to repay the loan
- Records of affiliations and ownership
- Profit and Loss or P&L statement that records the 180 days before the application
- Financial statement projected for one year
- Income tax returns for the business’s past three years
- Business lease or written document from the landlord that details the terms and conditions of the lease
- A brief history of the business and the challenges
- History of received loan and applications
The application process and the documents you will have to submit can vary slightly with the type of loan. On the other hand, it will vary considerably if you are purchasing an existing small business. Here are the things you should know about:
- Asking price of the business that includes equipment, inventory, lease, and machinery
- Current balance sheet
- Profit and Loss statement
- Federal income tax returns of business from the past two years
- The proposed bill of sale
- Documents of terms and conditions of sale
Summary of Commerce Bancshares’s Loan Options
Small business loans with Commerce Bancshares can be an amazing choice if you fit into all the criteria. Moreover, you should have the time to proceed with the loan processing as it is not a simple task.
You can choose any of the loans as mentioned earlier, depending on what your business demands. However, if you do not have the time or credit score to wait for these loans, you can choose alternative ways.