Decoding an SBA Loan from SmartBiz

Decoding an SBA Loan from SmartBiz

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If you have an established business in need of less than $150,000 of funding with 2 years in operation and good cash flows, SmartBiz’s SBA loans might be the lowest cost option for you. Their APR is 6-9% all inclusive and the loan is amortized over 10 years with no prepayment penalty — lower than any online alternative lender you can find aside from Kiva Zip. If your business can qualify for a SmartBiz Loan, our advice would be to "Just go for It".

SmartBiz’s SBA loans are one of the most well-crafted lending products we have seen in the past couple of years. SmartBiz started as a joint venture between Better Finance and Golden Pacific Bank. Better Finance builds the technology to digitize the whole SBA loan application process, pre-approves the application and sends over the loan package to Golden Pacific Bank.

Golden Pacific Bank, a preferred SBA lender, underwrites the loan and makes the final approval decision. Once the loan is approved, the funds will be deposited into the borrower’s bank account and the monthly loan payments will be directly debited through ACH. The whole process is streamlined and efficient. The cost is SBA’s typical low interest rate of 6-8%, plus 4% origination fee, and $23 – $317 closing cost. The loans are amortized over 10 years.

In case you are not familiar with SBA loans, they’re a government-backed loan program to help business owners expand, operate, or acquire a business. SBA does not issue loans directly. Instead, they authorize banks to issue loans that comply with SBA underwriting guidelines and guarantee up to 85% of the loan value. The SBA guarantee is how they can make the interest rate so low compared to non-bank products.

The SBA underwriting guidelines are not cut and dry. They’re subject to each bank’s interpretation. But after the 2008 recession, SBA wanted banks to be conservative and to minimize defaults. Some banks, in particular community banks that specialize in small business loans, are more willing to set more friendly terms with business owners (i.e. – more relaxed collateral requirements). Golden Pacific is a bank that’s friendly toward small businesses and their joint venture with Better Finance on SmartBiz takes the SBA loan application process to a whole new level.

Nav went through the whole application process to get a $75,000 loan and the experience is detailed below.


SmartBiz offers SBA loans of $5,000 to $150,000 to businesses with 2 years of operating history and meaningful revenue. A lien on the business assets and personal guarantees from 20+% owners are required.

The Application

We used the following information for a made-up business to apply for a SmartBiz loan:

  • Business name: Navtastic Hair Salon
  • Amount requested: $75,000
  • Use: working capital / renovations
  • Years in business: 4
  • Number of employees: 3
  • Ownership: 100% ownership
  • Annual sales: $500K

Let me walk you through our experience. First, we pick the amount of $75,000 and clicked on "Apply Now":

Then, we enter some basic information to create an account:

Next, we enter the business information. You need a DUNS number to apply for the SmartBiz loan. You can apply for a DUNS number on D&B’s website.

Ownership information:

I then enter my detailed personal information:

The next few screens check if I am eligible for the loan:

I am eligible! Now I will enter my bank account information:

And allow them to log into my bank account to verify my bank balances:

Confirm my application:

I think I am pre-approved! Yay! So exciting!!!

Enter verification information. Your business needs to have insurance. At a minimum, you need to have general liability insurance. Navtastic Salon is located in California where businesses are required by law to have worker compensation insurance if the business has any employees.

E-authorize a 4506-T tax return request so SmartBiz can request your past tax returns directly from the IRS. (Lenders don’t trust your submitted PDFs; it’s so easy to fake it.)

The final step is to upload the requested documents:

Finally, it’s done. The application is longer compared to other online lenders, but if you have all the information at hand, it shouldn’t take more than an hour.

Comparisons to other Lenders

The following table compares the SmartBiz Loans vs. other prominent online lenders. As you can see, SmartBiz is by far the lowest-cost option. The extra time spent on the application is totally worth it since the interest rate is so much lower, the term is so much longer, and the time to funding is comparable to other fast and efficient online lenders.

OnDeck Funding Circle LendingClub Business SmartBiz
Origination fee 2.5% 2.99% 3.5% 4%
Interest rate Very high 9.99% – 18.49% 14.9%*** 6-8%
APR 88.69% **** 12.76%- 22.74% 17.43% 7-9%
Loan amount $5,000 – $250,000 $25,000 – $500,000 $15,000 – $100,000 $5,000 – $150,000
Loan Duration 3-24 months 3-5 years 1-3 years 10 years
Speed to funding 1-2 weeks 1-2 weeks 1-2 weeks 1-2 weeks
Prepayment penlaty Yes. No No No
Required Documentation 6 months of bank statements and 2 years of tax returns 2 years of P&L
2 years of balance sheets
3 years of tax returns
6 months of bank statements
3 years of tax returns
6 months of bank statements
Business license
Asset List
*** based on a particular example
**** based on a particular example


You might have noticed that SmartBiz doesn’t ask for any business plans or financial projections during the loan application process. Yes, that is actually a key feature of SmartBiz Loans. They only collect information that’s necessary to determine the credit worthiness of the business and the business owner. They don’t think the pro forma financial information submitted by business owners really affect their credit worthiness. SmartBiz does their own projections. This saves business owners a lot of time and energy when applying for an SBA loan.

Overall, SmartBiz Loans is probably the best loan option for small business owners if you can qualify for it. Nav highly recommends SmartBiz Loans and we hope to see SmartBiz Loans expand their offering in the future.

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About the Author — Lydia serves as Content Manager for Nav, which provides business owners with simple tools to build business credit and access to lending options based on their credit scores and needs.

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