SmartBiz Business Loans: 2023 Review
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Pros and cons of SmartBiz
| Pros | Cons |
|---|---|
Relatively low minimum annual revenue requirements. Option for 2% interest rate deduction if you opt for prepayment penalty. Can dodge the penalty by not paying off your loan early. Starting rates are fairly competitive. | Packaging and referral fees, even on products like term loans. Borrowing is capped at $350,000. You may be able to secure these products cheaper by applying directly through the partner lenders themselves. |
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SmartBiz small business loans review
SmartBiz is a platform that partners with banks and other financial institutions offering small business loans. SmartBiz term loans, SBA 7(a) loans and potentially some custom financing options. SmartBiz may be quicker and more convenient, but be prepared to pay extra fees for SmartBiz’s services, though.
Who is SmartBiz for?
- Those who don’t like comparing lenders on their own. Smartbiz’s primary value is that it shops around for the best offers for you. You’ll pay an extra fee for this service through packaging and referral fees, which can range from 2.00%–3.00%.
- Those attempting to borrow less than $500,000. The max loan you can secure through Smartbiz is currently capped at $350,000.
- Those with lower annual revenue. Smartbiz’s minimum annual revenue requirements of $50,000 for an SBA 7(a) loan are notably low.
SmartBiz small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated interest range | Fees |
|---|---|---|---|---|
| Term loans | $30,000-$350,000 | 24-60 months | Starts at 9.99% fixed | Optional 5% prepayment penalty that comes with a 2% interest rate reduction.3% referral fee 3.00% package feePartner financial institutions may charge additional fees |
| SBA 7(a) loans | $30,000-$500,000 | 120 months | 11.25%-12.25% variable | Application fee of no more than $3,000Closing costs of about $4502% referral fee 2.00% packaging feeNo prepayment penalties |
| Custom Financing | $30,000-$500,000 | 24-60 months | Starting at 6.99% | Varies |
Term loans
SmartBiz can connect you with banks and other financial institutions that offer term business loans between $30,000 and $350,000, ranging from 24–60 months. Interest rates are fixed, with rates as low as 9.99%.
Term loans come with packaging and referral fees of 3.00% each. The partner lender you end up borrowing money from may charge additional fees, like closing costs.
There is an option to get an interest rate deduction of 2%, but to get it you’ll have to take on a prepayment penalty of 5%. This option is best for those who won’t pay their loan off early.
SBA 7(a) loans
SmartBiz partners with lenders that offer SBA 7(a) loans — the flexible, general purpose loan partially guaranteed by the U.S. Small Business Administration (SBA). Although 7(a) loans can come with fixed or variable interest rates, the SBA loans offered through SmartBiz appear to come with variable interest rates, currently 11.25% to 12.25%. You can borrow between $30,000 and $500,000. At this level of borrowing, there are no guarantee fees.
You might incur fees from Smartbiz’s partner banks. Application fees can be up to $3,000, and closing fees are usually somewhere around $450. These fees are usually added to your total loan amount, so they can be financed. In addition, you’ll pay a referral fee up to 2.00% and a packaging fee of up to 2% for using Smartbiz’s services.
Custom financing
SmartBiz advertises “custom financing” options to newer business owners with less cash flow. To connect you with anywhere from $30,000 to $500,000 in financing, it will explore many options with its partner banks, like lines of credit and invoice factoring, to find a way to get you approved. Terms on these financing options can be anywhere from 24 months to 60 months.
SmartBiz borrower requirements
| Minimum annual revenue | Minimum annual revenue 1 |
|---|---|
| Minimum annual revenue |
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| Minimum time in business | 2+ years for term loans and SBA 7(a) loans |
| Minimum credit score |
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To qualify for term loans or SBA 7(a) loans, you will need more than two years of business history. For SBA 7(a) loans, additional requirements to apply include minimum annual revenue of $50,000 and a credit score of at least 650.
Custom financing options may be available to those who do not meet these underwriting requirements.
Required documents
Your application will guide you through any required documents. Generally speaking, you should expect to provide your articles of incorporation, any business licensure, a profit and loss statement and tax documents for the past two years.
You may also be required to provide additional paperwork. For example, for an SBA 7(a) loan you will also need:
- Personal financial statement
- Projected financial statements
- History of past loan applications
- Personal resumes for each principal owner
- Narrative of business history and how the SBA 7(a) loan would help you reach your objectives
- Any business leases
Alternatives to SmartBiz
| SmartBiz | Funding Circle | TD Bank | |
|---|---|---|---|
| Minimum credit score | 650 for SBA 7(a) loans Not disclosed for other products | 650 for SBA 7(a) loans 660 for term loans and lines of credit | Not publicly shared |
| Loan products offered |
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| Starting interest rates | 11.25% for SBA 7(a) loans 9.99% for term loans 6.99% for custom financing | Varies for SBA 7(a) loans 11.29% for term loans 10.99% for lines of credit | About 3.00% for SBA 504 CDC loans Rates not publicly shared for all other products. |
| Maximum loan size | $500,000 for SBA 7(a) loans $350,000 for term loans and custom financing options | $5,000,000 for SBA 7(a) loans and term loans $250,000 for business lines of credit | Up to $5,000,000 for SBA 7(a) loans and SBA 504 CDC loans Up to $1,000,000 for term loans and commercial real estate loans Up to $500,000 for business lines of credit |
| Minimum annual revenue | $50,000 for SBA 7(a) loans Not publicly shared for all other products | $400,000 for SBA 7(a) loans $120,000 for business lines of credit | Not publicly shared. Maximum annual revenue of $15,000,000 for term loans and lines of credit |
SmartBiz vs. Funding Circle
Like SmartBiz, Funding Circle can refer you out to partner lenders to help you get term loans or SBA 7(a) loans. You can also opt to get a term loan directly through Funding Circle, though rates on these loans tend to be more expensive. It also connects borrowers with business lines of credit. Funding Circle has dramatically higher minimum annual revenue requirements. Its interest rates also start out higher, but SmartBiz has higher minimum credit score requirements.
SmartBiz vs. TD Bank
If you’d prefer to go with a traditional bank, you could look to TD Bank for your business financing needs. It offers more products than SmartBiz, and since it offers them directly, you’ll only find packaging fees on SBA 7(a) loans — not term loans or other products. TD Bank is not extremely transparent about underwriting requirements. The best way to find out if you qualify based on your annual revenue and credit score is to apply, and then compare the rate you’re offered to the ones you are offered by SmartBiz.