Are you planning to expand your small business or improve your business cash flow? Then, applying for a small business loan can be an excellent choice.
Many programs infuse working capital loans and additional financial support when your business needs it the most. UMB Financial Corporation small business loans are a popular choice.
It is vital to familiarize yourself with the proceedings to make an informed and confident decision for your enterprise. So, this article will take a closer look at small business loans by the bank. Now, read on to find out about the interest rates, fees, and more.
An Overview of UMB Financial Corporation's Loans
UMB Financial Corporation is a financial services holding company based in Kansas City, Missouri.
The company offers a wide range of financial services, from savings accounts to business loans. Further, this company is popular for its service of customization options for private wealth management.
UMB is an SBA-certified lender that offers various SBA programs for a broad range of qualifying businesses. They provide loans that can help you expand and grow your enterprise in many ways. You can purchase equipment, real estate, international services, and more.
This bank also offers many businesses longer repayment terms and lower interest rates for new companies. If you meet their criteria for a lower down payment and other benefits, you can apply for their loans.
Types of Loans Offered by UMB Financial Corporation
UMB financial corporation offers a few types of loans that can be very helpful. The bank will guide you over a call or in-person about the kind of loans that can be good for your business.
Before you go for that, it is better to know the type of loans they offer. In this section, you can find a detailed explanation of their loans.
1. Low Documentation Loans
Low Documentation Loans or LowDoc loans for small businesses come under program 7(a). This loan is designed to offer quick loans for small businesses to fix any financial issues they have.
As the name suggests, this loan requires you to provide only a few documents. Hence, the processing time will be faster than other loan types.
You can easily qualify for this loan if you have a good credit score and back money. However, you can only apply for 150,000 dollars or less in this loan type.
2. 504 Development Loans
The 504 Development Loan program is a suitable loan type if you are looking for a long-term financial solution. The bank offers fixed-rate financing of up to 5 million dollars for the major fixed assets.
Your business must fulfill the following criteria to qualify for the 504 Development Loan Program:
- Must operate for profit
- Should be in the United States or its possessions
- Have an average net income of fewer than 5 million dollars after the federal income taxes for the two years preceding the loan application
- Should have a tangible worth of fewer than 15 million dollars
- Feasible business plan
- Have qualified management expertise
- Must be able to repay the loan
3. Working Capital Loans
Similar to LowDoc loans, Working Capital Loans also offer short-term solutions to your business's financial problems. This loan is designed to finance your small business's everyday operations. It means that you can not use it to buy long-term assets or invest in other companies.
As it covers only short-term operational needs, you can use it for rent, debt payments, and payroll. Further, it can be very useful if your business has cyclical sales or higher seasonality.
Additionally, Working Capital Loans are given under the owner's name. Hence, it can impact your credit score. On the plus positive side, this loan can be very beneficial to businesses just starting. It is so because you do not have to worry about a period of low cash flow or traditional collateral.
What Lending Criteria Does the Bank Have?
Your business can be eligible for a 7(a) loan program by UMB Bank based on certain business aspects and principles. Primarily, the bank will consider how the business receives its income.
Secondly, they consider the location of the business and the character of the ownership. You can check out all the other criteria your business must fulfill below:
- Must operate for profit
- Be able to demonstrate the need for loan proceeds and the way you can repay the loan amount
- Your business must be small as established by the U.S. Small Business Administration
- Have well-invested equity
- Have used alternate financial resources such as personal assets
Your business will be eligible for a loan if it engages in activities the SBA defines as acceptable for loans under 7(a). Here are some businesses that are ineligible for financial assistance from a federal provider.
- Pyramid sales plans
- Academic schools
- Speculative businesses
- Real estate investment, including rental properties
- Nonprofit organizations
- Gambling activities
- Speculative businesses like oil exploration
- Consumer and marketing cooperatives
UMB's Interest Rates, Fees, and Loan Options
Interest rates and fees determine how beneficial a loan is. Therefore, it is vital to be aware of these numbers before committing to any type of loan.
The bank will provide you with detailed information about the rates and process before you accept the loan. Nonetheless, it is better to know about the interest rates and fees beforehand as it can help you prepare.
Although interest rates are negotiable, every bank will have a general range. So, here's a breakdown of rates for each loan mentioned above.
Interest Rate for Low Documentation Loans
Low Doc loans can be extremely helpful at the hour of need. As easy as it is to acquire it without paperwork, these loans come with higher interest rates. Further, this type of loan will come with short repayment terms.
- For loan amount up to 150,000 dollars - Less than seven years - interest rate can range anywhere near 5%
504 Development Loans Interest Rates
This type of loan will generally have lower interest rates as the design favors long-term benefits for the borrower. However, it can be quite difficult to get this loan since it requires a lot of documentation. Further, the processing time will also be more.
- For loans up to 5.5 million dollars - 10 years period - interest is about 2.231%
- Loan amount up to 5.5 million dollars - for 20 to 25 years plan - interest rates can range anywhere between 2.364% to 2.399%
Working Capital Loans Interest Rates
Working capital loans can provide the necessary financial backing when something goes wrong. You can use this loan to finance your business to recoup losses. As the lenders hand out these loans sooner, they will have higher interest rates when compared to other types of loans.
- For loan amounts up to 5.5 million dollars - for up to 10 years – the interest rate is around 2.231%
- Loan amount of up to 5.5 million dollars - for 20 to 25 years - ranges from 2.364% to 2.399%
As the interest rates do not cover the fees, the bank will charge you. The fees depend on the size and type of loan as well as on the particular bank. So, it is vital to consider before you accept the loan.
Generally, the fees can vary anywhere between 2% to 5%. This fee will cover everything from the credit check fees, application fees, closing fees, and packaging fees.
Applying for a small business loan at UMB is very similar to the process of any other bank. So, you will have to gather all the required documents before starting the process.
Once the bank processes your document, they will submit it to the SBA for confirmation. Here are some things you should have to increases your chances of getting a loan at UMB:
- Fill the SBA application form for the selected program.
- Provide accurate personal information that adheres to the government-issued documents
- Include the following documents:
o Accurate financial information as registered in the most recent government document
o Business license issued by the government
o Records of ownership and affiliation to the business
o Financial statement that projects for one year
o P&L statement (Profit and Loss) that record the 180 days before you apply for the program
o Federal income tax returns document
In addition to these documents, you will have to provide a brief history of your business and the challenges it faces. Plus, the bank will check your history of received loans and applications.
If you run your business in a leased area, you will have to provide a written document from the landlord. The document should include the terms and conditions of the lease.
Summary of UMB's Loan Options
UMB Financial Corporation small business loans can be very convenient for your business. LowDoc and Working Capital Loans can help you sustain your business during bad times. Whereas the 504 can bring a long-term resolution to your business.
You can choose the loan that you find serves your business interest. However, all these loans take considerable time, which you may not have. So, you can go with alternate ways like secure online lenders.