East West Bank is and is owned by the East West Bancorp, the bank has its headquarters in Southern California. East West Bank was founded in Los Angeles in 1973 to provide services to the Chinese-American population.
East West Bank also offers small business loans, especially SBA-backed loans. We have discussed those loans below.
East West Bank is an SBA NPL (National Preferred Lender) and can provide a faster turnaround. East West Bank also offers flexible payments and favorable loan terms.
3. SBA (7A)
The SBA (7a) loan program is the most common time of SBA loan, and only small businesses are eligible for this loan.
- Loan Amount: 5000,000 dollars
- Term: 10 to 25 years
- Funds are revolving and are based on the value of the inventory of the business.
- Loans can be used to purchase equipment, supplies, and material
- Real estate and other properties can also be purchased with the help of this loan
- The loan can be used for construction
- The loan can be used to refinance the debt or acquire a business
- The loan can be used for business expansion
4. SBA/CDC 504 Loan Program
CDC (certified development company) and SBA provide the 504 loan program that can be used to finance fixed assets of a small business such as buildings and other properties.
- 10 % of the total project costs injected by the borrower
- The bank finances 50 % of the project costs and also holds a deed of trust
- CBC, on behalf of SBA, finances 40 % of the project costs and holds the second deed of trust
- Borrowing Limit: Depends on the project
- Term: 10 to 15 years (30 years amortization)
Types of Loans offered by East West Bank
1. SBA (7A)
- Loan Amount: 5000,000 dollars
- Term: 10 to 25 years
- Funds are revolving and are based on the value of the inventory of the business.
- Loans can be used to purchase equipment, supplies, and material
- Real estate and other properties can also be purchased with the help of this loan
- The loan can be used for construction
- The loan can be used to refinance the debt or acquire a business
- The loan can be used for business expansion
2. SBA/CDC 504 Loan Program
- 10 % of the total project costs injected by the borrower
- The bank finances 50 % of the project costs and also holds the deed of trust
- CBC, on behalf of SBA, finances 40 % of the project costs and hold the second deed of trust
- Borrowing Limit: Depends on the project
- Term: 10 to 15 years (30 years amortization)
3. Commercial Real Estate
- Ten year variable of fixed-rate acquisition
- Value-added or bridge repositioning
- Ground-up construction financing
- Letters of Credit
- Collateral: Industrial, Retail, Offices, Hotel, Motel, Industrial, Self-Storage, Mix-Use, and Industrial
4. Equipment Financing and Leasing
- Lease: The lessee is treated as the owner of the business for taxing and accounting purposes.
- 100 % financing
- Transportation types: Corporate aircraft, rail cars, tractors, trucks, vehicles, marine vessels, trailers, and buses.
- IT & Office types: Servers, Laptops, Computers, Furniture Printing and telecommunications equipment
- Industrial types: Mining and manufacturing equipment, construction, material handling, and food processing
- Energy type: Energy assets (various), Energy-saving equipment, boilers, and chillers.
5. Trade Finance Lines of Credit
It takes time to convert purchases into cash, which is why importers need cash fluently so that their businesses run without disruptions. East West Bank lines of credit provide access to funds to help the business maintain a healthy cash flow.
East West Bank Interests, Fees, and Loan Options
1. SBA (7A)
- Interest Rate: 4.25 % for < 25,000 dollars, 3.25 % for 25,0001 to 50,000 dollars, 2.25 % for > 50,0001
- Fees: 0.25 % (short-term loan) 3.5 % (1000,000 dollars)
2. SBA/CDC 504 Loan Program
- Interest Rate: 2.4 % (Ten-year term), 2.35 % (25-year term), 2.41 % (also for 25-year term)
- Fees: 0.25 % (Loan servicing) 0.5 % (SBA Guarantee)
3. Equipment Financing and Leasing
- Interest Rate: Floating
- Fees: Not Specified
4. Commercial Real Estate
- Interest rate: Fixed and Variable
- Fees: Not specified
5. Trade Finance Lines of Credit
Interest Rate: 8.5-80 % (Medium-term loans), 7-30 % (Online term loans) 7-99 % (Merchant cash advances)
Fees: None
What Lending Criteria does East West Bank Have?
Below is the basic lending criteria that all the banks follow:
- Credit Score
- Annual Revenue
- Business Plan
- Collateral
- Time in Business
Credit Score
Credit is the most important component of all types of businesses, whether they are small or large. Lenders will always analyze the business's credit score and then decide whether it can pay the loan or not. Therefore, the best way to maintain a healthy credit score is to pay your dues on time.
Credit scores can also be easily obtained from several agencies such as Equifax, Dun & Bradstreet, and Experian. Another way of maintaining a positive credit score is to have a low debt-to-income ratio. Lenders will not invest in businesses that don't have a good credit score.
Annual Revenue
Another important factor that the lenders will review is the annual revenue of the business. Most lenders will only lend to those businesses that have been profitable for the last two years or more. Businesses need to make sure that all the financial statements are accurate and up to date.
Lenders will also look at specific details such as the current account (current assets divided by liabilities) and ask for copies of bank statements and transactions. However, businesses will only be eligible for a loan if their cash flow is growing.
Business Plan
A minority of lenders might not ask for a business plan, but most of them do, and businesses need to come with a clear and concise proposal. Usually, lenders require the business plan to know the purpose of the loan and discuss the business's stability.
One of the main components of business plans is the resumes of managers and staff. However, despite having a clear business proposal, the lenders will still ask for proof of the staff's ability and relevant credentials and experience.
Collateral
Collateral is an essential requirement, and most lenders will not provide a business loan if it cannot give collateral. Collateral can be anything like equipment or property. The collateral will also decrease the risk for the lender as it will have an asset in hand, so if the company fails to pay the loan, the collateral can be paid to fund the damages.
The owner of the company needs to provide a personal guarantee and will also need to submit some essential documents:
- Driver’s license
- Business license
- Tax returns (personal)
- Tax returns (business)
- Insurance plans of business
- Records for payroll
- Detail of owner
- Other financial obligations
Time in Business
Most banks are hesitant to lend loans to new companies that have been active for just a few months. Lenders cannot trust small businesses or startups that have just entered the market because they don't have a proper credit score and the cash flow is usually unstable. Banks will most likely lend to businesses that have been active for more than two years.
SBA 7 (a) Eligibility
- Manufacturing: 500 to 1500 employees
- Whole: At least 100 employees
- Services: Three years of average gross sales of 3.5 to 14.5 million dollars
- Retail: Three years of average gross sales of 5 to 20 million dollars
SBA 504 Eligibility
- One job opportunity should be retained or created for a 50,000 dollar loan
- Property must be at least 51 % business-occupied; for construction, the property should be at least 60 % business-occupied and 80 % in the next three to ten years.
East West Bank Application
Following is the application procedure of all the banks that borrowers have to follow:
Before you apply for a loan, ensure that all your documentation is up to date. Also, organize all the documents properly, and if some essential documents are missing, contact the relevant authorities. Collect all the financial information about your business and pay all the dues as soon as possible.
- Personal and Business credit scores and history
- Account statements of the business
- IRS documents, tax returns of the business, and the owner as well.
- Other important financial documents such as unpaid invoices, credit card details, and accounts receivable.
- Legal contracts (leasing, franchising, incorporation)
Requirements for SBA (7a)
- SBA loan package application
- Business should be active for at least three years
- Submit tax returns
- A breakdown of the financial information about the business
- Detailed information regarding how the funds will be utilized
- Copy of sales, construction contracts, sales, and other transactions
- For startup business: a business plan
Requirements for SBA (504)
- Proof of ability to repay the loan and on time
- Information regarding projected cash flows of the business
- The character of the business should be really good. SBA maintains 'Statement of Personal History
- Relevant staff expertise
- A feasible business plan
For more information, check out the website of East West Bank.
Summary of East West Bank Loan Options
East West Bank offers several types of loans that are designed to help small businesses. The interest rates and payments of the loan vary, so does the criteria. Study all the necessary details, review the requirements and then choose a loan. For more information, check out the SBA website. Below is a list of the loans East West Bank offers.