Small Business Loans FAQs

The amount of your own cash or assets you contribute towards the overall project is often referred to as your “equity injection.” The term can be misleading because the equity is not being injected into the acquired business but is going directly to the seller. Learn more about the process here.

SBA loan interest rates vary based on the specific product. In general, SBA rates are some of the most competitive on the market. However, loan rates fluctuate so it’s best to speak with one of Live Oak’s lenders to determine what your interest rate will be. For an SBA 7(a) loan, interest rates are the daily prime rate, which is determined by the Federal Reserve, plus a lender spread which is calculated depending on the loan amount and the loan term. Our lending team will gladly walk you through any questions you may have about specific interest rates, depending on the unique needs of your business.

You may have heard that we do things a little differently here at Live Oak. Our team understands that this is more than just your day job – it’s who you are. With a fusion of uncommon service and expertise, we strive to help you master your business and achieve your dreams. What does that mean? We answer our phones on the weekends. When feasible, we’ll come see you, so we can talk about your objectives with you in person. And above all, we genuinely care about the success of you and your business. Here are a few things that really set us apart:

• The Business Analyst Group: upon closing, you’ll have a dedicated business analyst for the duration of your loan. They will be available to answer questions and provide feedback and guidance on business performance.
• Industry and loan product expertise: we have deep knowledge of specific industries as well as years of experience working with the Small Business Administration. In fact, we have Preferred Lender status with the SBA, meaning we can expedite the lending process with ease.
• Relationship focused: for us, your success is our success. Meeting each customer allows us to create meaningful relationships

There is no simple answer to this question – talk through it with someone from our lending team. This amount depends on your business type and use of funds. Live Oak can guide you after we learn a bit more about you and your business.

The process and the timeline to receive funding varies depending on your business and the loan product. Generally, once the loan application and all related documents are submitted to Live Oak, we’ll strive to get your loan closed swiftly. Throughout each phase of the loan process, a borrower will work with different members of the loan team. The three stages of every loan are application, underwriting and closing. We have a team decked against each stage that will be your guide, providing updates every step of the way.

Whether you’re looking to buy, build or expand, you can expedite the financing process by taking these simple steps now.

• Know your credit history. Your personal credit is more than just a score, so be ready to answer questions about any items that appear on your credit report.
• Have your business and personal tax returns in PDF format. Once you’re ready to move forward, having digital copies readily accessible will help reduce the time it takes to complete a loan application.
• Understand your financial standing. Most banks will ask for information regarding your personal financial resources, assets and obligations when you’re applying for a loan.
• Be prepared to articulate your business plan. Banks are looking to lend money to people who believe in their project and have completed thorough due diligence.

Additional necessary application documents may include (but are not limited to):

• Driver’s License
• Voided Business Check
• Bank Statements
• Balance Sheet
• Profit & Loss Statements
• Business Debt Schedule

There is no “one size fits all” way to structure a loan. We account for a variety of factors when helping you structure the deal. What we can say is that the lending team at Live Oak prides itself on getting creative and we’re adept at building a unique loan package. We’ll tailor your loan to the needs of your business, whether that includes an SBA loan, a traditional bank loan or a combination of the two.

When trying to determine how much debt you can take on, we look at a number of different characteristics of your business. One of our priorities is ensuring that you take on an appropriate loan amount so that your cash flow can support the monthly payments and pay yourself a reasonable amount from the business. We look at your credit score, collateral and your debt service coverage ratio (DSCR). While your DSCR can be calculated several ways, we often use this formula:

• Net Operating Income / Current Year’s Debt Obligations =Debt Service Coverage Ratio

For further clarification on what you can afford, talk to a member of our lending team at Live Oak.

We are cash flow lenders and view collateral as a last resort means of repaying a loan. So, we are first ensuring that cash flow is sufficient to repay the proposed debt, and we are looking at collateral second. That being said, there are certain collateral requirements that need to be met depending on the loan product, size of the loan and the use of proceeds. Some common examples of collateral that might be required are: home equity, retirement accounts, commercial real estate, equipment and automobiles. Be sure to speak with your lender about potential collateral requirements.

We can help you navigate the many financing options and make sure it’s a good match for you. One of the resources that we often utilize is the Small Business Administration, which is a government agency. A portion of SBA loans is guaranteed by the government and as mentioned above, the most common SBA loan programs include 7(a) and 504 loans. We can also combine those SBA loans with conventional loans, lines of credit and more. Let’s talk through your goals and we’ll craft a personalized loan package, together.

There are pros and cons to both SBA and traditional financing products and your Live Oak lender can confidently walk you through which option is the best fit for you. However, SBA loans have some unique benefits. Compared to conventional loans, they generally have longer repayment terms and do not have financial covenants or balloon payments.

When considering an SBA loan, it is helpful to seek out a lender who is part of the SBA’s Preferred Lender Program (PLP). A PLP lender will know how to determine eligibility, can properly structure the loan and collect appropriate documents to keep things moving smoothly. PLP status allows the bank to approve the loan without waiting for the SBA’s approval; the bank acts on behalf of the SBA.

Live Oak does not currently have online loan details or payment capability. We pride ourselves on being high touch, so you will have a dedicated business analyst on call to answer any loan related questions or help process any servicing action.

Live Oak Bank’s loan programs are not a fit for every business. The size of your business may be too large and ineligible for certain government guaranteed loan programs. Live Oak must manage exposure to certain risks and maintains institutional restrictions on industries or business models that are:

• Highly cyclical
• Dependent on discretionary spending
• Exhibit customer/revenue concentrations
• Do not have strong/reliable historic cash flow

However, we’re passionate about supporting small businesses and want to help all business owners succeed. Check out Live Oak’s Resource Center, where we offer webinars and articles which may be of interest. The U.S. Small Business Administration also provides a thorough business guide to assist small business owners with every aspect of planning, launching, managing and growing your business.