First Bancorp Small Business Loans

First Bancorp is a bank holding company that has its headquarters in Southern Pines, North Carolina. The bank operates as First Bank in North and South Carolina; it has more than 94 branches in North Carolina and has total assets worth 4.3 billion dollars. In 2017 the total deposits of the bank were 3.4 billion dollars.

First Bancorp offers a wide variety of business loans, such as small business loans. Below we have discussed the SBA-backed loans that First Bank offers.

Small Business Association Loans (SBA)

SBA Loans are long-term loans that the government partially guarantees. The Small Business Association is a federal agency and is helping small businesses grow. The SBA has partners nationwide that lend the loan to small businesses. Unlike other loans, the SBA loan works a little differently as its terms are favorable.

SBA (7A)

Types of Loans offered by First Bancorp

SBA (7A)

Lines of Credit

These loans are designed to meet the business's requirements and give the firm the flexibility to access cash conveniently and quickly. So take advantage of the business opportunities coming your way and use your lines of credit as needed. You can also streamline your expenses by dividing them into personal and business expenses.

Business Loans

Inject a lump sum of cash into your business for long-term financing. With the help of business loans, you can expand your business, refinance debt and finance your equipment and vehicles.

Commercial Mortgages

First Bank provides competitive pricing and is also a commercial lender on a variety of commercial mortgage products. The dedicated staff of the bank includes real-estate experts that know the industry and the market. These experts can help structure the loan you need.

Ready Reserve

A safeguard that is easy to use and extremely convenient. If your checking out is out of cash, you don't need to worry, as, in that situation, First Bank will automatically transfer funds to your bank through overdraft lines of credit. This will help you avoid overdraft fees and NSF.

First Bancorp Corporation Interests, Fees, and Loan Options

SBA (7A)

Business Loans

Lines of Credit

Commercial Mortgages

Real Reserve

What Lending Criteria does First Bancorp Have?

Below is the basic lending criteria that all the banks follow:

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.

Why is Credit History Important?

Good credit history, better known as credit score, shows that the business has been paying off its monthly debts before the due date. The business's credit score will also impact the interest rates offered, loan amount, and the term. A good credit score means you will get a higher amount of loan at a cheaper interest rate.

Why Does Your Credit Score Mean?

The credit score of a business is an overview of how well they've managed their credit. A three-digit score, also referred to as a FICO score, should typically fall in the 350 to 800 range. However, credit agencies have different scores, so the score your business gets might differ.

Credit Score Standard

Capacity

The capacity of the business is taken into account because it shows to the lender that you are capable of paying your dues and expenses on a new credit account. In addition, lenders will generally review your monthly income and financial obligations.

Why is Capacity Important?

Lenders analyze the debt-to-income ratio when they are trying to determine if the business is eligible for credit or not. Therefore, a low debt-to-income ratio or DIT is a good indicator and proves to the lenders that your business can pay the loan.

The standard for Debt-to-Income Ratio

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 flowing 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:

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.

Bank Statements

Lenders will be interested in taking a look at the bank statements of a firm and assess if the firm is capable of paying back the loan or not. Bank statements provide a vivid insight for lenders and allow them to analyze the firm's cash management.

At a minimum, lenders will ask for bank statements of the last four to five months to have the proof they need. However, if you are applying for an SBA-backed or conventional bank loan, more bank statements than usual will be needed.

Personal and Business Tax Returns

Like the personal and business credit score, lenders will be interested in evaluating your business and personal tax returns and will ask for all the information. The lenders will judge your ability to pay the loan back and then decide whether to lend the loan or not.

Generally, lenders will ask for personal tax returns of the past two years. These documents will be important if you have a pass-through entity (partnership, sole proprietorship, or S-corp) where you report the profit and loss of your business on your tax return.

However, the tax returns of your business will also play an influential role if you have a corporation or an LLC that is taxed as a corporation. In this case, the lender will ask for the business tax returns of the last two years to verify expenses, revenue, and profit.

Purpose of the Loan

This is an obvious requirement, and a typical small business loan will be a statement that will describe your plans for using the loan. In the statement, the lender will ask you to be specific, and although lenders allow various loan purposes, the loan amount should match its purpose.

Amount of the Loan

This is also related to the purpose of the loan, and you will need to be specific about the amount of loan you need. Generally, banks have access to large amounts of capital and can easily issue six and seven figures loans. So, if a small loan is needed, banks might not be willing to provide it.

For small loans below the figure of 250,000 dollars, you might want to try out other alternatives and even check out SBA-backed loans.

Business Licenses and Permits

A common loan requirement is business permits and licenses. Although these requirements may vary by locality or state, lenders will be interested in the business's proof of ownership and operating license.

First Bancorp 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.

For more information, check out the website of First Bancorp.

Requirements for SBA Loans

For more information on SBA loans, click here.

Summary of First Bancorp Loan Options

First Bancorp is a bank holding company and offers a wide variety of loans. Below is a list of all the loans offered by the bank:

All the details regarding these loans have been stated above, along with the lending criteria and process of application. As always, before applying for the loan, discuss with the bank and make sure you have all the necessary documents.

For more information regarding loans, learn more.