SMBC or Sumitomo Mitsui Banking Corporation Group is a top-tier banking and financial institution in Japan, Yurakucho, Tokyo, and Chiyoda. The SMBC group caters to many clients ranging from corporates, individuals, small and medium scale enterprises, public sector entities, and more. The bank has held a firm position on the Financial Stability Board's systematically important banks worldwide.
The group is present in over forty countries, and SMBC America's Holdings Inc. is one. The SMBC America's Holdings is registered with the New York State Department located in Albany, New York. They understand that your small business is your big dream. Whether you're starting or established, a small business loan will set you on the path to success.
In this article, you'll know everything about small business loans, their types, interest rates, fees, procedures, and much more.
So, let's explore.
An Overview of SMBC America's Holdings Inc's Loans
SMBC America's Holdings Inc is a highly reputed banking and financial institution situated in Albany, New York. The SMBC group has its branches in over forty countries and is the 12th largest bank in assets. The institution has held its presence in all the International Financial Centres. In 2020, Forbes ranked the SMBC group as the 80th largest public company.
The SMBC group serves a wide variety of financial products and services, which are:
- Cash Management
- Correspondent Banking Services
- Corporate Banking
- Aviation Finance
- Financial Institutions
- Foreign Exchange and Treasury
- Trade Finance
- Syndicated Loans
- Real Estate Finance and Fund Finance
- Lease Finance
- Project Finance
- Leveraged Finance
Small business loans or startup loans are an integral part of the financial services the SMBC group offers. Any business, whether new or established, can acquire a small business for multiple purposes.
- To gain initial capital required to start a business
- To gain ownership of an existing small business
- To pump capital into an already running business for liquidity
- To prepare for future business expenses
Small business loans are financed to business owners via debt financing facilitated through banks or government sources. Let's look into it in detail.
Debt financing is when businesses borrow money from banks to fund their initial operation.
It also holds for situations where businesses borrow money from banks to pump cash flow into their existing business. In both cases, a business is in debt to the bank. The lending bank does not have a say in how the business is managed.
Businesses can choose various financial sources like friends, family, credit unions, technology-based lenders, capitalists, government sources, and financial institutions like Banks.
Debt financing is often the most viable way for a business to kick start because they have low-interest rates and last for longer periods.
Small Business Administration
The U.S. Small Business Administration is a government organization that offers loans to support small businesses that operate within United States possessions. The organization's activities revolve around three C's - capital, contracts, and counseling.
A business can apply for SBA loans through its partners like banks, credit unions, and other lenders in partnership with the organization. After the credit froze in 2008, the SBA loans were improved to a 90% guarantee rate supporting small and medium scale enterprises.
SMBC America's Holdings Inc offers debt financing via SBA loans and directly. Let's look into the types of SBA loans offered by the bank.
Types of Loans Offered by SMBC America's Holdings Inc.
SMBC America's Holdings Inc offers multiple types of loans. Let's look at them one by one.
The SMBC group offers a range of financing options from debt products to operating leases. The group partners with SMBC Aviation Capital, based in Ireland, and SMBC Leasing and Finance Inc.
SMBC group has its team scattered across New York, Singapore, Tokyo, London, and Dublin and has expertise in all aspects of aircraft finance. Financing solutions such as PDP financing, EETC liquidity facilities, operating leases, secured loans, and beyond are offered by the bank.
Since SMBC group works closely with SMBC Leasing and Finance Inc, it is open to helping businesses improve return on investments and manage working capital smartly. The team of experts in the bank pays close attention to the unique challenges businesses faces and caters to them through lease financing and cross-border financing solutions.
Various clients across the U.S., Asia and Europe rely on SMBC's extensive asset knowledge in potential tax implications, lease and general accounting principles, and lease structures to propel their business forward.
SBMC America's Holdings Inc offers direct lending opportunities to many of its clients. Whether a company is looking for leverage buyout financing, a new acquisition that requires recapitalization, or simply growth finance, SBMC has got you covered. The bank offers several types of financial structures.
- Second-lien debt
- Senior-secured debt
- Mezzanine debt
- Bridge financing for yield bonds
The bank also provides indirect funding.
SBMC lends financing to asset managers and business development companies. Additionally, its securitization practice is based on supporting the middle managers operating in the institutional lending area.
Projects in the power sector that require financing are one of the closest clients of SBMC groups. SBMC's Power Project Finance team holds expertise in export credit agency financing and great experience in technicalities and modeling of power projects. The bank offers financing in the following segments.
- Renewable energy (solar, geothermal, wind, hydro)
- Transmission and distribution
- Conventional power
Limited and Non-Recourse Debt Financing
- Strategic independent power producers
- Leading corporations in the power industry
- Project developers
- Private equity firms
- Leading corporations in the power industry
Commercial and Institutional Real Estate
The team of experts operating in New York and Los Angeles offers clients a robust and competitive real estate approach. Clients have a smooth experience in cross-border transactions as the team works closely with members in Tokyo, Sydney, Hong Kong, Toronto, London, and Singapore. The team is actively engaged in -
- Real Estate Investment Trusts (REIT)
- Project-level and portfolio loans
- Real Estate Operating Companies REOC)
Asset Classes Real Estate Financing Covers
- Portfolio of assets
Financial Solutions are Available for
- Bridge/Interim Financing
- Construction loans
- Interest-rate Hedging solutions
- Term loans
- Letters of credit
The New York team of experts helps clients across North and South America with Syndicated loans. They assist the clients in underwriting, structuring, primary loan distribution, and secondary market activities across multiple sectors. The experts work closely with SMBC's Loan Syndications Team in Asia and EMEA to develop competitive and innovative solutions on a global scale.
SMBC Holds Various Syndications Capabilities
- Letters of credit
- Project Finance
- Acquisition finance
- Club/syndicated loans
- Real estate finance
- Structured finance
- Financial advisory
- Cross-border finance
- Export credit agency and multi-lateral
- Leveraged finance
If your concern is a small business loan, SBA loans are the best financing option available at banks. An SBA loan is designed to help small businesses tackle financial challenges like acquiring starting capital, renovation costs, supply chain costs, and other such business expenses.
There are eligibility criteria that owners must meet to acquire the loan. However, the criteria aren't as stringent as other loan forms. SBA loans have an excellent guarantee rate. Businesses are 75% to 90% of the time financed with information as basic as amount and type.
Now let's look at the types of SBA loans offered at banks.
SBA 7(a) Loan Program
The SBA 7(a) loan program is the central loan program with a fund cap of $5 million. The program has a flexible guarantee rate which fluctuates between 75% to 85%. For loan amounts up to $150,000, there is an 85% guarantee rate, while those above $150,000 are available at a 75% guarantee.
Let's look at the advantages of the 7(a) loan program.
- High Flexibility: Most loans offered by banks require a detailed roadmap on how and for what the business will use the money. New businesses are often looking for the capital to start, and aspects like business plans and roadmaps come on the way. A 7(a) loan program is highly flexible and requires little for businesses to get capital.
- Repayment Duration: Most businesses turn sweaty the moment they hear about repayment. The best part about the SBA 7(a) loan program is its long repayment duration. The repayment is stretched for 25 years, and most businesses figure out a way to properly pay the loan back.
- Low-Interest Rates: Loans lent directly by the bank have stringent eligibility and high-interest rates. However, this is not the case with the SBA 7(a) loan program. The maximum interest rate goes up to 4.75%, the lowest in contrast to other loan forms.
The SBA Express is a special type of SBA loan available for seekers who urgently need capital. Generally, SBA loans have high turnaround times, around 8-10 business days. The uniqueness of an SBA express loan is that even though it has a lower guarantee rate, you'll receive a response in less than 36 hours.
SBA Express is a viable means to clear the existing debt. Most businesses are ridden with debt taken by unofficial lenders and friends. The burden of repayment and constant torture deployed by the lenders is unbearable. SBA Express allows businesses to acquire a loan quickly and repay existing debts. With low-interest rates and long repayment duration, businesses can smoothly escape existing debt.
What Lending Criteria Does The Bank Have?
Since the focal point is Small Business Loans, we'll not get into the other loan types offered by SMBC America's Holdings Inc. We'll directly jump into the bank's lending criteria.
Following are the requirements seekers must-have.
- The business should not have an existing debt to government sources.
- The business has sought financial assistance from other sources before applying for an SBA loan.
- The business must be 'small' as defined by the SBA standards.
- The business is looking for profitability.
- The business is using capital for a dedicated purpose.
- The business must operate within the confines of the United States.
- The business should be able to show the need for financing.
SMBC America's Holdings Inc. Fees, Interest Rates, and Loan Options
Getting a loan is not easy. It often comes with worries like eligibility, interest rates, fees, and repayment program. Remember, an SBA loan is designed for the sole purpose of helping small and medium scale enterprises.
So, let's look into the interest rates.
SBA 7(a) Loan Program
Interest rates of the SBA 7(a) loan program fluctuate based on the Federal Prime Rates. You can expect a fluctuation between 3.25% to 4%. Given below are the fluctuations you can expect.
Loans that are less than seven years.
- $25,000 or less: Prime rate plus 4.25%.
- $25,000 - $50,000: Prime rate plus 3.25%.
- Over $50,000: Prime rate plus 2.25%.
Loans that are longer than seven years.
- $25,000 or less: Prime rate plus 4.75%
- $25,001 to $50,000: Prime rate plus 3.75%
- Over $50,000: Prime rate plus 2.75%
SBA Express Loans
SBA Express Loans have a low turnaround time, increasing the interest rates slightly more than 7(a) loans. SBA express loans stretched above seven years have a prime rate between 4.5% to 6.5%.
Every borrower has to pay a guarantee fee. The guarantee fee is an amount that is based on a specified percentage of the loan amount. The guarantee fee is between 0% to 3.75%. Factors like the loan amount and maturity period also determine the percentage of the guaranty fee.
No guarantee fee is charged for amounts lesser than $150,000. The SBA uses a systematic approach to determine the guarantee fee, as given below.
- $150,000 to $700,000 is 3% fee.
- $701,000 to 1 million is 3.5% fee.
- More than 1 million is a 3.75% fee.
SMBC America's Holdings Application
Since SBA loans are provided in partnership with the US's Small Business Administration, the application at financial institutions and their associated requirements are the same across most top-tier banks.
Here's a list of all the requirements.
- Three years of income tax records
- Annual financial reports
- Business license, permit, or certificate
- Proof of ownership
- History of previous loans
- A filled SBA form-type as provided by the bank
- Financial statements as proof of your capacity to repay the loan
- Three months' worth of profit/loss statements
- Personal and business information
- Business history and challenges
Summary of the SMBC America's Holdings Inc.
SMBC stands for Sumitomo Mitsui Banking Corporation (SMBC) and is a core member of the SMFG group. Some of SMBC's competitive advantages are as follows.
- Good coverage of the Fortune 500 companies and a strong client base
- Global operations that allow SMBC to provide international and innovative solutions making SMBC the leading choice of businesses in the US expanding in Asia
- A robust balance sheet and holistic approach
If you're in dire need of a small business loan, SMBC America's Holdings Inc in Albany, New York, is a smart choice.
You're all set. Get your business running!