State Street Corporation is an American bank headquartered in Lincoln street, Boston. The bank is a holding company and operates worldwide. The State Street Corporation is the 2nd oldest bank in the United States. The bank offers small business loans and other business loans as well.
As we already know, for small businesses, struggles are real, and most banks are unwilling to give them a helping hand. However, State Street Corporation has SBA loans that are specifically designed to cater to the needs of small businesses. We have discussed small business loans below.
SBA (Small business administration loans)
The State Street Corporation offers two types of SBA loans for small businesses:
1. SBA (7A)
The SBA (7a) loan program is the most common time of SBA loan, and only small businesses are eligible for this loan. Later in this article, we will discuss the requirements businesses need to fulfill to obtain a loan.
Purpose
- Provide long-term and short-term working capital for small businesses
- 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
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.
Purpose
- The loan can be used for business expansions.
- More fixed assets can also be purchased with the help of the loan
- The loan enables the business to upgrade its facilities as well.
Types of Loans offered by STATE STREET CORPORATION
1. SBA (7A)
The SBA (7a) loan program is the most common time of SBA loan, and only small businesses are eligible for this loan..
2. 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.
3. Equipment Financing
Equipment financing is a business loan, typically used by small businesses to purchase machinery for the business. The loan can also be used for medical equipment and office furniture.
4. Real Estate Loans
More commonly known as a mortgage, a real estate loan is used to finance real estate or properties. The borrower will need to sign a legal document, also known as a mortgage note, that promises to repay the loan on time.
STATE STREET CORPORATION 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
- Interest Rate: Competitive
- Fees: Unknown
4. Real Estate Loans
- Interest Rate: Competitive
- Fees: Unknown
What Lending Criteria Does STATE STREET CORPORATION 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.
Requirements for SBA (7a)
- Businesses should operate for 'For-Profit.'
- Business should be active only in the United States
- Significant invested equity
- Can use alternate financial resources (personal assets)
- Should be able to demonstrate loan need
- Funds should only be used for business purposes
Requirements for SBA (504)
- Businesses should operate for 'For-Profit.'
- Business should be active only in the United States
- Business should have a net worth of fewer than 15 million dollars and more than 5 million dollars
- Find out if you are an eligible business. Check here.
- No other sources of finances should be used other than the 504 loan
- Funds should only be used for business purposes
STATE STREET CORPORATION 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, please log onto the website of State Street Corporation. Click here. For details regarding SBA loans, click here.
Summary of STATE STREET CORPORATION Loan Options
The pandemic has violently attacked all the businesses, and many have gone bankrupt. Even before the pandemic arrived, small businesses were struggling, as their finances are limited. However, many banks, including State Street Corporation, have stepped up and now are aiding small businesses and helping them get back up.
The SBA deserves the majority of the credit, as it has partnered with banks to provide beneficial loans for small businesses. Below are the loans that State Street Corporation offers:
- SBA (7a)
- SBA/CDC 504 Loan Program
- Real Estate loans
- Equipment financing
While SBA loans and small business loans stand out, Equipment and real estate financing are also beneficial for business, as they offer competitive rates and their terms are flexible. However, before applying for a loan, always consult experts; the best thing is to visit the bank or talk to a lender. You can also apply for State Street Corporation loans online.