Frequently Asked Questions

SBA 7 (A) LOANS

How does the Program work?
The SBA guarantees a percentage of the loan, rather than actually providing the money. With the SBA's guarantee, lenders grant loans they may not otherwise consider. Newtek provides you with the capital. As your lender, Newtek processes and services your loan, answers your questions and maintains a relationship with you over the term of the loan.

What can the loan money be used for, and for how long?
Whether you already own a business or you're starting, expanding, or purchasing one, you can use the funds:

To provide working capital - Term up to 10 years
To purchase equipment, inventory, refinance, or acquire a business, and for leasehold improvements - Term up to 10 years
To purchase Real Estate . Term up to 25 years

How much can a business borrow?
Under Newtek's SBA program, you can borrow from $25M to $2MM.

What fees are involved?
The SBA charges a one-time guarantee fee that ranges from 2% to 3.75% of the guaranteed loan amount. Newtek charges a one-time packaging fee from $1000 to $2500 depending on the loan amount.

Is financing available to start-ups?
Yes, SBA's less stringent requirements for owner's equity and collateral and the longer terms at better interest rates make the SBA an excellent option.

Can SBA proceeds be used for salaries, operating expenses and working capital?
Yes - Proceeds can be used to fund these items.

How long will it take to get my loan approved?
Once a borrower has submitted a complete loan package, an approval can usually be obtained within 5-7 business days.

How long for disbursement?
Depending upon the complexity of the loan, the timeframe from application submission to disbursement of funds takes approximately 30-60 days.

How does a business plan factor into the application process?
Business plans are critical for start-up businesses. The SBA program requires one as part of the application process and Newtek can assist you in writing one.

How does Newtek view below standard credit ratings?
While Newtek does look for strong personal credit ratings from all owners and guarantors of the loan, we will work with those who have below standard credit ratings to see if there are logical and sufficient reasons to explain the present ratings.

ACCOUNTS RECEIVABLE FINANCING

Why should I use Newtek for receivables financing?
Instead of waiting 30, 60, 90 days or more to be paid by your customers, we provide you instant cash flow on your receivables. In turn, your accelerated cash flow can be used to improve your company's credit rating, gain increased purchasing power, enhance production and sales.

What are the requirements for funding my receivables?
Our criteria are simple. The work, product or service must be completed, delivered and accepted. We accept accounts that you consider creditworthy. However, if there's any doubt, our credit checking services are available.

What happens if my customer is unable to pay?
If an account is deemed uncollectible, we will continue to bill and under your guidance, pursue collections. Various recourse programs are available for you.

Will working with Newtek jeopardize my relationship with my customers?
No, based on the Newtek program set up with your company all statements sent to your clients feature your company trademark or logo. You never lose your identity.

Can I use my existing software?
Newtek has an extensive programming department whose sole focus is integration. What this means is that if you use a standard accounting package, QuickBooks for example, or an industry-standard point-of-sale system, Newtek can integrate with it!

Who mails the statements to my customers?
Newtek does! On a monthly basis Newtek mails statements that feature your trademark or logo. You maintain control of your accounts. Your individual identity is always protected. As an added service, Newtek will insert your advertising material in your statements and track frequent shopper purchases.

Where do my customers make their payments?
Newtek will arrange to have your customers make checks payable to you and send them to our lockbox.

Does a company have to be profitable to qualify?
Not always - some clients are new companies that have not yet turned a profit, or they have suffered recent financial losses. Newtek looks at the quality of a client's customers rather than its specific financial condition.

How long does the closing process take?
A typical deal can be closed and funded within ten (10) days of the initial package. In some cases, a closing can be expedited.

What industries will Newtek purchase accounts receivable from?
Almost all industries - where clients sell a service or goods and their account debtors (customers) have good credit.

Can a company with limited credit history qualify?
Yes, as long as they have creditworthy customers.

Is there a minimum volume of receivables that needs to be committed?
In most cases, Newtek will look for a minimum monthly volume of at least $10,000.

COMMERCIAL REAL ESTATE LOANS

What are the advantages of financing commercial real estate with Newtek?
We offer a 30 year amortization which reduces your monthly payment, where most lenders limit terms to 20 years. We'll also finance up to 90% of the property's value, compared to 65%-80% offered by other lenders.

Will there be a prepayment penalty?
With low, fixed rate financing, a prepayment penalty will generally apply but we'll negotiate the terms of that prepayment to meet your needs related to your future plans for the property. In all cases, you are allowed to pre-pay 20% of your loan balance in any rolling 12 month period, so you could completely pay off your mortgage in five years without incurring a penalty.

What are your typical closing costs?
Unlike home mortgage financing, commercial real estate financing costs are typically paid by the borrower. If you are refinancing with sufficient equity in the property, those costs can be rolled into your loan. We do not charge an application fee, but like most lenders we will require a deposit to cover third party costs once you have accepted the terms of our preliminary review.

How long does it take Newtek to close a loan?
Most transactions close within 60 business days after receipt of a complete loan application, and can close faster for highly motivated Borrowers.

My business is young and growing so I haven't shown adequate cash flow on my past several years' tax returns. Can I qualify to buy a building?
We understand the benefits of locking in your overhead expenses by investing in your business location, and have years of experience working with start-up and young companies. We have programs available that are based on your current, stated income rather than your historical tax returns.

My accountant recommended I apply for an SBA 504 loan to buy my building, how do I know if that program is best for me?
We offer a variety of financial products and services, including conventional real estate financing, SBA 7a loans, SBA 504 loans, and lines of credit. Let our experts assess your needs, do the math, and present you with several options to help you make an informed decision.