How To Cancel SBA Loan Application?

An SBA removes some of the risk for the financial institution who is issuing the loan. There are some steps which will make the steps simpler and quicker for you during the generally tedious SBA loan process. In this article we will talk about applying for an SBA loan to completion, the types and the reapplication. We will be explaining in detail how to cancel an SBA loan application and how long that will take, along with what an SBA disaster loan is.

Guideline to the SBA Loans Application Process

Small business administration (SBA) loans are guaranteed business loans for small businesses. Although a few SBA financing programs are available, the government agency gives SBA loan guarantees about 85% of the loan sum given through SBA-endorsed moneylender. The three significant SBA loan programs permit you to acquire cash for practically any business through these SBA-guaranteed loans.

The SBA is a federal agency committed to helping entrepreneurs to improve and develop their businesses. With this help, business proprietors can leverage contract openings and have access to customary small business loans. The SBA uses federal cash to give a percentage of loans given by conventional banks. This move is to help the financial foundations to have more incentive to lend cash to small businesses.

Available SBA Loans

Currently, there are three significant types of SBA loans present for small business owners based on the amount and purpose of lending. The three types include:

SBA 7(a) loans

The SBA 7(a) loans are general-purpose loans of about $5 million. They come with a 10-year repayment term.

CDC/504 loans

CDC/504 loans are directed toward the purchase of real estate and equipment. They have a loan repayment term of 25 years.

SBA microloans

Small business owners can access up to $50,000, with a repayment period of six-year max on SBA microloans.

Only the most eligible applicants get approval for SBA loans. To aid your application, you need to give the lender details regarding your company and yourself. Your lender should consider you and your business worthy of the loan with backings. Having clear profit and loss statements, a business plan and a full personal credit will increase your chances of getting approval.

SBA Loan Process

The whole SBA loan process can be a little difficult to understand and go about especially for first-time borrowers. A few business owners have been discouraged because of the tedious application process. Let us take a look at the application process and how long each stage takes:

• Application for a loan – the borrower needs to gather all documentation. This will take around 1-30 days to complete.
• The lender underwrites the loan. On an average, this takes about 10-14 days to finalize.
• The lender gives the loan a stamp of approval and sends a commitment letter. This takes a further 10-21 days.
• The lender then closes on the loan which will take around 7 – 14 days.

These steps are a summary on how to apply for an SBA loan. It is important to be continuously in touch with your lender throughout the process. Your lender will immediately let you know if there are any problems along the way and proffer the best solution.

Usually, it takes around 60 – 90 days, based on your lender and amount, to finalize an SBA loan process. The larger the amount is, the longer is the term, and the stiffer the lender will review your application.

Can you reapply for an SBA loan?

Your SBA loan can sometimes get denied for various reasons. The SBA asks prospective borrowers to wait for 90 days from the denial notice before they can reapply. If it is possible to wait for three months, use this time to improve your application. Work closely with your lender to make sure that your new application meets all the requirements. If you cannot afford to wait for 90 days, then try other financing options.

Required Documents for an SBA Loan Application

Let us look some of the most essential documents required of an SBA Loan applicant:

• A Business loan proposal or request letter.
• A business plan –must include financial projection and goals for the company.
• Business credit report – this is for people who are in business already
• Collateral – if applicable.
• Financial statement, P&L statement, balance sheets, and debt schedules, if any, for the last two-three years.
• Legal documents; include a business license, articles of incorporation, contracts with vendors or suppliers, leases for commercial vehicles, real estate, franchise agreements, etc.
• Personal and business income tax return for the last two-three years.
• Personal background statement; includes previous address, names, criminal record, educational background, etc.
• Personal credit report – this includes yours and that of any business partners and co-owners you may have.
• Purpose of loan detail – a detailed overview of what you intend to do with the loan.
• Resume – this includes yours and that of any business partners and co-owners you may have.
• Size of business and age.

Keep in mind that this is just a summary of the paperwork needed from the borrower. Make sure that you are prepared to provide more paperwork when required. This is why collecting and organizing paperwork takes a lot more time for some small business owners.

Can I cancel my loan application?

If you do not want to continue with your SBA application again, you can always cancel it. In order to cancel your loan application, get in touch with your lender/customer support as soon as possible. On the off chance that your loan has been funded, you will have a window of five days in which you can cancel it. Make sure that all the funds received are in your account before you go ahead with the cancellation. This is because your lender will try to withdraw it within 5-7 business days. If you have not received the total amount after 30 days before you apply for cancellation, you will be required to repay the loan, along with any fees and interest. Cancelling a loan does not have an impact on your credit score as there are no details your lender has to report to the credit bureau.

How to withdraw an SBA loan application?

If you find yourself needing to withdraw your PPP loan application for any reason, the process is straightforward whether or not the application has been accepted by the SBA.

If your application is pending approval, you can initiate the withdrawal directly through your Biz2Credit account. Simply navigate to the ‘Applications’ tab, locate the specific application, and select the ‘withdraw’ option from the menu. Follow the prompts to complete the withdrawal process swiftly.

In the event that your application has already been accepted by the SBA, withdrawing requires the assistance of a Biz2Credit funding specialist. Reach out to our support team at support@biz2credit.com with the subject line “Withdraw Request” along with the Case ID of your application. Once confirmed, please note that it may take up to 96 hours or more for the withdrawal to reflect in the SBA’s systems.

For those collaborating with a CPA Firm, the withdrawal process can also be facilitated through the CPA Business Funding Portal. If the option is not readily available, CPAs can simply email cpasupport@biz2credit.com with the subject “Withdraw Request” along with the business name or Case ID.

We’re committed to ensuring a smooth and efficient withdrawal process for all our clients.

SBA Disaster Loan

Keep in mind that the following information has directly been taken from the SBA official website.

Who can use an SBA disaster loan?

COVID-19 EIDL

If you run a small business, nonprofit organization of any size, or a U.S. agricultural business with 500 or fewer employees, and have undergone a substantial economic injury due to the COVID-19 pandemic, you can apply for the COVID-19 EIDL. This loan applies to all businesses based in any U.S. state, territory, or the District of Columbia.

All other disasters

Businesses of all sizes situated in declared disaster areas, private nonprofit organizations, homeowners, and renters impacted by declared disaster, including civil unrest and natural disasters such as hurricanes, flooding, wildfires, etc.

How to use an SBA disaster loan?

COVID-19 EIDL

• For working capital
• Normal operating costs (i.e. continuation of health care benefits, rent, utilities, and fixed debt payments).

All other disasters

• Business operating expenses that could have been met had the disaster not occurred.
• Losses not covered by insurance or funding from the Federal Emergency Management Agency (FEMA) for both personal and business.

Types of disaster loans

Physical Damage Loans

Home and personal property loans

On the off chance that you live in a proclaimed disaster area and have encountered harm to your home or individual property, you might be qualified for financial help from SBA — regardless of whether you do not possess a business. As a mortgage holder, tenant or individual land owner, you might apply to SBA for a loan to assist you with recuperating from a disaster.

Eligibility

• Homeowners may apply for up to $200,000 to replace or repair their primary residence.
• Renters and homeowners may borrow up to $40,000 to replace or repair personal property — such as clothing, furniture, cars and appliances — damaged or destroyed in a disaster.
• Secondary homes or vacation properties are not eligible for these loans. However, qualified rental properties may be eligible for assistance under SBA’s business physical disaster loan program.
• These loans cover disaster losses not fully covered by insurance or other sources. Proceeds from insurance coverage on home or property may be deducted from the eligible loan amount.

Use of proceeds

• SBA can refinance all or part of a previous mortgage in some cases, when the applicant does not have credit available elsewhere and has suffered substantial disaster damage that is not covered by insurance.
• You may be eligible for up to a 20 percent loan amount increase above the real estate damage, as verified by SBA, for improvements that will help prevent risk of future property damage caused by a similar disaster.
• You may not use the funds to upgrade homes or make additions, unless required by the local building code.

Terms

For applicants unable to obtain credit elsewhere:

• SBA will determine whether an applicant can obtain credit elsewhere.
• The interest rate will not exceed 4%.

Maturity

• No prepayment penalty or fees
• Up to 30 years

Collateral requirements

• Collateral is required to the extent possible for home loans over $25,000 in Presidential and Agency declarations.
• Real estate is the preferred form of collateral, even if the equity is insufficient to secure the full loan amount.
• SBA will ask the applicant for available collateral, but will not decline a loan for lack of collateral.

How to apply

• Apply online for an SBA disaster assistance loan. SBA’s inspectors will estimate the cost of damage once your application is completed and submitted.
• Complete, sign and date IRS Form 4506-T with your application, giving permission for the IRS to provide SBA your tax return information.

Additional information

Contact SBA’s Disaster Assistance Customer Service Center

• Phone: 800-659-2955
• TTY: 800-877-8339
• Email: disastercustomerservice@sba.gov

Business physical disaster

If you own a business situated in a declared disaster area that has undergone damage, you may be qualified for financial assistance from SBA. Businesses of any size and most private non-profit organizations may sign up for an SBA loan to recover after a disaster.

Eligibility

• Covers disaster losses not fully covered by insurance or other sources. If required to apply insurance proceeds to an outstanding mortgage on the damaged property, that amount can be included in your disaster loan application.
• Proceeds from insurance coverage on business property may be deducted from the eligible loan amount.
• Up to $2 million to qualified businesses or most private nonprofit organizations to cover disaster losses not fully covered by insurance.

Use of proceeds

Loan proceeds may be used for the repair or replacement of the following:

• Equipment
• Fixtures
• Inventory
• Leasehold improvements
• Machinery
• Real property

Disaster loan funds might not be used to upgrade, develop, or extend a business, unless as necessitated by building codes. If you sign up for Mitigation Assistance to make changes that can assist in lowering the risk of future property damage caused by a similar disaster, you may be qualified for up to a 20 percent loan amount increase above the real estate damage, as certified by SBA.

Terms

For applicants unable to obtain credit elsewhere:

• Interest rate will not exceed 4%.

For applicants who can obtain credit elsewhere:

• Interest rate will not exceed 8%.

SBA will determine whether an applicant can obtain credit elsewhere.

Maturity

• No prepayment penalty or fees
• Up to 30 years, depending on ability to repay the loan.

Collateral requirements

• Real estate is the preferred collateral. Loans of $200,000 or less will not require the owner of the business to use their primary residence as collateral if it is determined the owner has other assets of equal quality and of a value equal to or greater than the amount of the loan.
• Required for loans over $25,000

How to apply

• Apply online for an SBA disaster assistance loan. SBA’s inspectors will estimate the cost of damage once application is completed and submitted.
• Complete, sign and date IRS Form 4506-T with your application, giving permission for the IRS to provide SBA your tax return information.

Additional information

Contact SBA’s Disaster Assistance Customer Service Center

• Phone: 800-659-2955
• TTY: 800-877-8339
• Email: disastercustomerservice@sba.gov

Mitigation Assistance

You can protect your home or business and decrease property harm with the assistance of SBA. In case you have been impacted by a disaster, you can revamp a stronger business by expanding your SBA disaster assistance loan up to 20% of your checked actual harm to make mitigation upgrades. Borrowers for the most part have two years after their loan approval to demand an expansion for higher modifying costs, code-required redesigns or mitigation. Think about these ventures:

Flood mitigation

• Add sump pump
• Convert lowest floor to flexible space that is less likely to be damaged in a flood
• Elevate structures
• Landscape property to improve water runoff and drainage
• Relocate home or business outside flood plain
• Seal roof deck

Wildfire mitigation

• Install 1/8” mesh screening over all vents to keep embers out of eaves and vents
• Install Class A fire-rated roof
• Install non-combustible gutters, fences and gates
• Remove roof and gutter debris that can be ignited by airborne embers
• Replace single-pane windows with dual- or multi-pane tempered glass windows

Wind mitigation

• Brace or upgrade to wind-rated garage doors
• Install a safe room or storm shelter built to FEMA guidelines
• Install hurricane roof straps
• Strengthen structures to protect against high wind damage
• Upgrade to pressure-rated windows

Earthquake mitigation

• Anchor rooftop-mounted equipment
• Install window film to prevent shattered glass injuries
• Strengthen and retrofit masonry buildings and concrete facilities that are vulnerable to ground shaking

Call on 800-659-2955 or locate a Disaster Recovery Center near you to inquire about increasing your loan for mitigation purposes. SBA approval of the mitigating measures will be needed prior to any loan increase.  There are no expenses or charges to apply, and you are under no obligation to accept a loan if approved.

Economic Injury Disaster Loans

If you have suffered major economic injury and are one of the following types of businesses located in a declared disaster area, you may be qualified for an SBA Economic Injury Disaster Loan (EIDL):

• Small agricultural cooperative
• Small business
• Most private nonprofit organizations

Eligibility

• EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere.
• EIDL provides the necessary working capital to help small businesses impacted by a disaster survive until normal operations resume.
• Substantial economic injury means the business is unable to meet its obligations and pay its ordinary and necessary operating expenses.

SBA can give up to $2 million to assist with meeting financial commitments and working costs that might have been met had the disaster not happened. The credit sum will be founded on your actual economic injury and your company’s financial requirements, whether or not the business suffered any property harm.

Keep in mind that a business might fit the bill for, both, an EIDL and a physical disaster loan. The maximum combined loan amount is $2 million. A different SBA Disaster Assistance program known as Business Physical Disaster Loans covers property harm

Use of proceeds

• Working capital and normal expenses
• Example: Continuation of health care benefits, rent, utilities, and fixed debt payments.

Terms

• The interest rate will not exceed 4%

Maturity

• No prepayment penalty or fees
• Up to 30 years, repayment term to be determined by ability to repay the loan.

Collateral requirements

• Real estate is the preferred collateral. Loans of $200,000 or less will not require the owner of the business to use their primary residence as collateral if it is determined the owner has other assets of equal quality and a value equal to or greater than the amount of the loan.
• Required for loans over $25,000

How to apply

• Apply online for an SBA disaster assistance loan. SBA will send an inspector to estimate the cost of damage, once your application is completed and submitted.
• Complete, sign and date IRS Form 4506-T with your application, giving permission for the IRS to provide SBA your tax return information.

Additional information

Contact the SBA Disaster Assistance Customer Service Center

• Phone: 800-659-2955
• TTY: 800-877-8339
• Email: disastercustomerservice@sba.gov

Military Reservist Loan

Eligibility

• Businesses with the financial capacity to fund their own recovery are not eligible for MREIDL assistance. Federal law requires SBA to first determine whether the credit necessary to accomplish full recovery is available from non-government sources without creating an undue financial hardship.
• If your business is a major source of employment, SBA has authority to waive the $2 million statutory limit.
• The amount of each loan is limited to the actual economic injury as calculated by SBA, business interruption insurance and whether the business and/or its owners have sufficient funds to operate.
• The filing period begins on the date the essential employee receives a notice of expected call-up and ends one year after the essential employee is discharged or released from active duty.
• The maximum Military Reservist Economic Injury Disaster loan (MREIDL) loan amount is $2 million.

Use of proceeds

You can use proceeds for ordinary and necessary operating expenses. You may not use proceeds:

• In lieu of regular commercial debt, to refinance long-term debt or to expand the business
• To cover lost income or lost profits

Terms

• The interest rate is 4%.

Maturity

• No prepayment penalty or fees
• Up to 30 years, depending on ability to repay the loan

Collateral requirements

• Collateral is required for all MREIDL loans which are greater than $50,000.
• SBA accepts real estate as collateral when it is available.
• SBA will not decline a loan for lack of collateral, but will require the borrower to pledge collateral that is available.

How to apply

• Apply online for an SBA MREIDL
• Complete, sign and date IRS Form 4506-T with your application, giving permission for the IRS to provide SBA your tax return information.

Additional information

Contact the SBA Disaster Assistance Customer Service Center

• Phone: 800-659-2955
• TTY: 800-877-8339
• Email: disastercustomerservice@sba.gov

How to cancel an SBA Disaster loan application?

To cancel an SBA disaster loan application, send your request via email to loanresolution@sba.gov. Make sure to mention the loan name and number in your email.

Conclusion

Running and financing a business proves more intricate than meets the eye. For small business owners, securing financing often becomes a pressing need. Many entrepreneurs turn to small business loans due to dwindling revenues or an urgent need for additional working capital. However, SBA loans typically don’t cater to those seeking quick cash. The entire SBA loan process typically spans 60 to 90 days for settlement. Unlike other small business loans and alternative financing options, canceling an SBA loan due to the extensive administrative work and documentation required can be time-consuming.