Banks have always been reluctant to offer loans to small businesses, as the risks are too high. In addition, most small businesses don't have the appropriate finances, credit scores, and collateral to pay off a loan. However, recently the trend is changing, and banks are lending a helping hand to small businesses.
The SBA has also launched several small business initiatives along with banks and is offering PPP and 504 Loans. Truist bank also has several loans to help small businesses, and they have been discussed below.
11.SBA 504 Loan
Purpose
This loan is designed to fulfill the long-term needs of a business, such as purchasing commercial real estate, starting the business, or renovating facilities. This loan requires less equity than other loans.
Eligibility
Businesses should be worth at least 15 million dollars and should have a net income of 5 million dollars.
Maximum Loan Amount
Up to 10 million dollars or more
Maximum Loan Term
Loan term of 25 years
Maximum Guarantee of SBA
A portion of the loan offered by the bank is determined by SunTrust pricing; SBA 2nd lien portion is determined during debenture sales.
Owner Equity and Liquidity
Minimum requirement of 10 %
Collateral
The SBA does not require collateral; however, the assets used as finances are considered collateral. Therefore, if the business assets are insufficient to finance the loan, personal assets may be needed.
Interest Rates
Competitive and Fixed
12.SBA 7(a) Loan
Purpose
This loan is designed to grow business finances to fulfill all their business needs, such as working capital or purchasing real estate. The lines of credit are not permitted.
Eligibility
Businesses should be worth at least 15 million dollars and should have a net income of 5 million dollars.
Maximum Loan Amount
5 million dollars
Loan Term
For working capital: five to seven years, ten years for other fixed assets and other equipment, and 25 years for real estate.
Maximum Guarantee of SBA
75 to 85 %
Fees for SBA guarantee
A fee is charged for guaranteeing the loan by SBA
Collateral
The SBA does not require collateral; however, the assets used as finances are considered collateral. Therefore, if the business assets are insufficient to finance the loan, personal assets may be needed.
Interest Rates
Plus (no balloons)
13.SBA Express Loan or Line of Credit
Purpose
This loan offers lower borrowing maximums, which means there is little paperwork required, and the response to the application is quick. The down payments of this loan are also lower compared to other loans.
Eligibility
Businesses should be worth at least 15 million dollars and should have a net income of 5 million dollars.
Maximum Loan Amount
250,000 dollars
Loan Term
Loan term of ten years.
Maximum Guarantee of SBA
50 % guarantee
Fees for SBA guarantee
No fees charged
Collateral
The SBA does not require collateral; however, the assets used as finances are considered collateral. Therefore, if the business assets are insufficient to finance the loan, personal assets may be needed.
Interest Rates
Competitive variable and fixed
14.SBA Working Capital Loan – Export Express
Purpose
Through its exporting working capital program, SBA offers financing that covers the export needs of a business. This Export Express working capital loan is designed to fulfill all the export financing, market development, and business expansions. In addition, this loan can also help financial trade shows, equipment, and real estate.
Eligibility
This loan is a 'for-profit’ business, the sole proprietorships should meet the size and industry guidelines set by SBA, and the business should be operational for at least a year.
Maximum Loan Amount
500,000 dollars
Maximum Guarantee of SBA
90 % guarantee for 350,000 dollars, 75 % guarantee for 500,000 dollars
Fees for SBA guarantee
0.25 % fee for maturities that are less than a year, 2 % fee for < 150,000 dollars and 3 % fee on amount of > 500,000
15.SBA Working Capital Loan – Export Working Capital
Purpose
The purpose of the SBA export working capital loan is to finance the pre and post export needs. In addition, this loan will assist small businesses who need working capital on a short-term basis to fund their export costs.
Eligibility
This loan is for-profit business, the sole proprietorships should meet the size and industry guidelines set by SBA, and the business should be operational for at least a year.
Maximum Loan Amount
5 million dollars
Maximum Guarantee of SBA
90 % guarantee on 5 million dollars
Fees for SBA guarantee
0.25 % for SBA on guarantees
Types of Loans offered by Truist Bank
1. SBA 504 Loan
This loan is designed to fulfill the long-term needs of a business, such as purchasing commercial real estate, starting the business, or renovating facilities. This loan requires less equity than other loans.
2. SBA 7(a) Loan
This loan is designed to grow business finances to fulfill all their business needs, such as working capital or purchasing real estate. The lines of credit are not permitted.
3. SBA Express Loan or Line of Credit
This loan offers lower borrowing maximums, which means there is little paperwork required, and the response to the application is quick. The down payments of this loan is also lower compared to other loans.
4. SBA Working Capital Loan – Export Express
Through its exporting working capital program, SBA offers financing that covers the export needs of a business. This Export Express working capital loan is designed to fulfill all the export financing, market development, and business expansions. In addition, this loan can also help financial trade shows, equipment, and real estate.
5. SBA Working Capital Loan – Export Working Capital
The purpose of the SBA export working capital loan is to finance the pre and post export needs. In addition, this loan will assist small businesses who need working capital on a short-term basis to fund their export costs.
6. Business Term Loans
These loans are designed to fulfill all types of business needs, such as expansions and acquiring other assets. In addition, business term loans are also capable of financing growth. The term of these loans is up to 20 years.
7. Equipment Leasing Loans
This loan can finance all your equipment needs, as there comes a time for every business when more equipment is needed. This loan offers finances of 250,000 to 50 million dollars.
Best for:
- Cars and trucks
- Computers
- Technology
- Construction
- Industrial tools
- Medical
- Office equipment
Truist Bank Interests, Fees, and Loan Options
We have identified seven loans offered by Truist Bank, and below, we have discussed their fees and interest rates.
1. SBA 504 Loan
- Interest Rates: Competitive and Fixed
- Fees: Not required
2. SBA 7(a) Loan
- Interest Rates: Plus (No balloon)
- Fees: Fee is charged for the guarantee of the loan by SBA (amount not known)
3. SBA Express Loan Line of Credit
- Interest Rates: Competitive and Variable
- Fees: Not required
4. SBA Working Capital Loan – Export Express
- Interest Rates: Not known
- Fees: 0.25 % fee for maturities that are less than a year, 2 % fee for < 150,000 dollars and 3 % fee on amount of > 500,000
5. SBA Working Capital Loan – Export Working Capital
- Interest Rates: Not known
- Fees: 0.25 % SBA fee
6. Business Term Loans
- Interest Rates: Fixed and Variable rates
- Fees: Not known
7. Equipment Leasing Loans
- Interest Rates: Not known
- Fees: Not known
What Lending Criteria does Trust Bank Have?
The General criteria for lending are followed by all the loans mentioned above:
- Credit Score (Personal and Business)
- Time in Business
- Credit History
- Current debt amount
- Collateral
- Industry
- Cash Flow and Income (Debt and Income ratio should be positive)
However, for SBA loans, an additional criterion needs to follow:
- Owners who own 20 % of their business are required to guarantee unconditionally. However, if an owner has a controlling interest will be required to submit a guarantee.
- Startup businesses will require additional equity of 5 %. Special-purpose also requires a 5 % equity. Thus, the total equity requirement is 10 %.
Truist Bank Application
The following is the general process of loan application that is followed:
- Pre-Approval (the process of qualifying)
- Loan application (Should be filled by the business)
- Review the package of loan application (The loan officer will review it)
- Loan Committee (Once loan is approved, the application is forwarded to a loan committee and is reviewed by an adjudicator)
- Term Sheet (will be reviewed by loan officer)
- Submission of business documents (Owners info, staff info, credit history, Business info)
For more information, please log onto the website of Truist Bank. Click here.
Summary of Truist Bank Loan Options
We discussed features of all the business-related loans that are offered by Truist bank:
1. SBA 504 Loan
2. SBA 7(a) Loan
3. SBA Express Loan or Line of Credit
4. SBA Working Capital Loan – Export Express
5. SBA Working Capital Loan – Export Working Capital
6. Business Term Loans
7. Equipment Leasing Loans
Truist bank offers all the necessary small business loans that will help propel your business to new heights. However, before applying for the loan, do study the general criteria and the application process.