Small business loans are the support you can depend on when you plan to start a new business or expand an established one. If you plan to create a new business or expand an established one, SBA is right here to help fulfill your requirements.
Applying for SBA loans can be challenging if you are new to them. However, you should know that you can make applications a cakewalk with the right information and sources. Additionally, the eligibility criteria are more or less the same for all banks providing small business loans. However, the types may differ.
Flagstar Bank offers a range of loans that help you fulfill your business requirements. Read on to know more.
An Overview of Flagstar Bank's Loans
Flagstar Bank offers its clients a unique banking experience by opening up a full-service banking opportunity. Chartered in 1987, Flagstar has reached a monetary value of $27.1 billion and is the sixth-largest national bank.
It is a notable bank for having served a diverse set of people and inclusive of all communities. Additionally, the bank's team is filled with skilled associates who pose an asset to the finance company. Their commitment to the organization is reflected in their efforts.
Through 150 branches spread over in Ohio, Wisconsin, California, Indiana, and Michigan, Flagstar Bank promotes homeownership and financial well-being. They include exclusive grant programs, down payment assistance, and CRA mortgage programs.
The mortgage divisions of the bank are spread over 89 retail locations. You can anticipate the importance they put on loans to help their client pursue their dreams. And small business administration loans are a part of their big initiative.
Therefore, Flagstar Bank, a subsidiary of Flagstar Bancorp, is an ideal way to start with your small business. Different types of SBA loans from the bank offer you several opportunities to turn into profitable commitments.
Types of Loans Offered by Flagstar Bank
Although SBA allows you to have loans to finance your small business purposes, different loans bring you additional features. These types of loans are generic to all the banks providing SBA loans. However, the names differ, and the services make them unique.
Small Business Administration loans or SBA loans are meant to finance the financial side of your businesses. It is intended to help you achieve that dream of establishing your business in the fast-pacing market.
Moreover, the bankers at Flagstar are trained to initiate loans only in your best interest. Newbies in the market often apply for SBA loans. Therefore, they are most likely to require help in the process. The associates at Flagstar Bank guide you through the process keeping your objectives in mind and the least profits for the bank.
You can expect personalized SBA loans from Flagstar Bank. These loans can fulfill the purpose of applying for real estate, augment working capital, consolidate debt, and whatnot. The reasons for you to apply for these loans at Flagstar Bank are manifold.
They offer SBA loans up to $5,000,000 at fixed or variable interest rates. The bank offers smaller down payments compared to conventional banks. You need not pay any prepayment charges for loan terms less than 15 years.
Lower monthly payments are payable for loan terms ranging till 25 years, and there is no requirement for balloon payments. You have the benefit of getting a higher loan-to-value ratio. You can expect revolving credit lines, and the additional fees include SBA packaging fees, guarantee fees, or more.
Business Lines of Credit
When you have sorted out a plan to start a small business, you need to work out strategies to uplift that business. Therefore, business lines of credit are one fool-proof way to achieve that aim.
Business credits finance your business, such as bringing you equipment and other requirements. These credits allow you to borrow any amount for your business purposes until you repay it on time. Additionally, you also pay the set interest rates for the borrowed amounts.
Flagstar Bank specializes in business lines of credit and has trained to guide you through the process starting from the application. Business lines of credit enable you with several benefits.
You receive working capital, and it allows you to take loans over $10,000. The process enables floating interest rates and requires collateral, including inventory, deposit certificates, cash, marketable securities, real estate, machinery, equipment, etc.
You need not pay any amortization. It includes fees, such as out-of-pocket costs, annual fees, origination fees, and application fees.
What Lending Criteria Does the Bank Have?
The lending criteria for SBA loans in Flagstar Bank are the same as other banks. They are straightforward. All you have to do is submit the required documents and fill in the necessary fields of the application form. You need to provide the minimum requirements to apply and get approval for your loan.
- Provide details of credit approval.
- Meet the lending requirements for the loan purpose.
- Provide a satisfactory business report along with personal credit history.
- Have a balance sheet mentioning a sufficient cash flow with profits to fulfill your financial obligations.
- Show an adequate business income to repay the term loan without relying on investments.
Flagstar Bank's Interest Rates, Fees, and Loan Options
SBA 7(a) loans are funded by the banks that fulfill your loan amounts for your small business purposes. Typically, the interest rates for the SBA 7(a) loans are generally set on a maximum level, and banks cannot charge their clients more than the set limit.
The SBA Loan interest rate is based on the primate interest rate of the U.S. The U.S. prime rate depends on the market rate. The prime rate marks the limit for the banks to charge the interest rates on the SBA 7(a) loans from its customers.
Currently, the prime rate is 3.25%. This means that the ongoing SBA loan rate ranges between 6% to 8%.
With excellent credit scores, you can expect lower interest rates than this as well. Nevertheless, no bank can charge you more than the prime rate, which is 8%. You should also know that these SBA loans interests can be either fixed or variable.
A fixed interest rate means that your monthly payments remain fixed throughout the loan term. Variable rates of interest would mean they can increase or decrease within the loan term. Loans below the amount of $50,000 usually have low rates of interest.
SBA 7(a) Loan Fees
Any additional charges are made according to the total annual cost or the annual percentage rate (APR) of the SBA 7(a) loan. Your loan amount and the loan term influence your fees.
For loans more than $150,000 or less, 2% of the loan is charged a fee. 3.75% of the loan for an amount of more than $1 million is charged a fee. A lesser rate of guarantee fees is applied for any loan amount with a term of fewer than 12 months.
Additionally, fees like application fees, credit check fees, appraisal fees, etc., can also be charged.
SBA 7(a) Loan Terms
The bank decides upon your loan term, which is influenced by the loan amount. Additionally, your ability to repay the borrowed amount and the loan's purpose are all factors that influence the loan term.
- The maximum loan term for SBA 7(a) loans for real estate is 25 years.
- SBA 7(a) loans for equipment usually have a loan term of 10 years.
- Working capital SBA 7(a) loans have a repayment term of 7 years.
You may have already noticed that the loan repayment terms are pretty lengthy and are convenient enough to fulfill the purpose of your loan. You need to repay your loan monthly and maintain consistency to avoid any penalty fees.
Additionally, the bank charges a prepayment penalty fee for SBA 7(a) loan when it has a loan term of 15 years or more. No prepayment charges will be imposed other than this term.
Flagstar Bank's Application Process
The application process to apply for an SBA loan at Flagstar Bank is similar to the application process or any other conventional bank. All you need is to fill up the required field of the online application form on their official page and provide the necessary details.
- Once you have selected Flagstar Bank as your source of small business loans, learn its details.
- Gather all the documents necessary for submitting to get your loan approved.
- Sort out the information about your business before submitting the same for the loan.
- Maintain the financial statements of your business and your personal expenses for records.
- Submit all the details of all the business owners, such as their Social Security Number, address, tax returns, etc.
- Before submitting your application, preview all the fields and documents to be submitted.
Summary of Flagstar Bank's Loan Options
If you are all set with your plans to start a small business with your partners, it would be a wise choice to compare the different loan rates. With good knowledge about the current loan rates prevalent in the market, the choice becomes clear.
You can enquire about the different rates other banks charge or the terms they follow. For that purpose, you can review other loan options to find the best suit for your requirements.