Frequently Asked Questions
How long does the loan process take?
The length of the process varies based on the scope of application. You will receive feedback from our staff as to the status of your application within 15 days of receiving your completed application. Our staff is happy to assist you in preparing a complete loan application. Most delays occur due to incomplete loan applications. If your application is complete and the process is not held up for missing documents, the processing time is between 30-45 days from receipt of application to loan closing.
What if I have challenging credit?
We require a credit score of at least 600. Your credit score is not the sole requirement of an approved or denied application but the content within the report should reflect good personal financial management. If unfavorable items are reported, we’ll will consider the circumstances impacting repayment ability such as medical emergencies or divorce. Repaired and rebuilt credit can be acceptable. We look favorably on efforts to rectify past credit issues.
If you have credit issues, you should write a detailed personal statement explaining circumstances and action taken. Please submit that statement with your loan application as an attachment.
What collateral do I need?
Appropriate collateral depends on many factors, especially the size of your loan request. We will require a personal guarantee and a pledge on business assets as collateral. It is common to also pledge personal assets.
Examples of collateral include: home or property, vehicles, equipment, inventory, and accounts receivable.
What can I use the money for?
Loans may be used for the following purposes:
- Working capital
- Leasehold improvements
- The purchase of inventory or supplies
- The purchase of furniture or fixtures
- Purchase of commercial real estate
- Restructure debt (with some limitations)
Loan funds cannot be used for:
- Personal expenses
- Delinquent taxes (in most cases)
- Down payments
What does it take to get a loan?
In general, a successful loan package includes a good business idea and plan and strong business management skills. When considering a loan application, we use the “5 C’s of Credit” as a rule of thumb.
- Capacity – The capacity of the business and yourself to repay the loan.
- Collateral – Is the collateral you have offered enough to repay the loan if all else fails?
- Conditions – The conditions in which your business must succeed. Conditions include but are not limited to: the economy, your competition, and the market.
- Credit – Your credit history and how you have repaid previous financiers.
- Character – Your personal characteristics and your ability to successfully operate the business.
The strengths and weaknesses of each “C” are weighed.
What is a business plan?
A business plan is the “roadmap” for your business. A good business plan is your best business management tool and is also required to apply for a loan. There are many local resources and websites that discuss business plans. See our Tools and Templates page for more information.
What if I need more money than Carolina Small Business can lend?
We often work with banks and other community lenders. We can “participate” in multiparty financing. If your needs are greater than $250,000, Carolina Small Business may consider a lending partner to assist with your loan project needs.
What kinds of businesses has Carolina Small Business helped?
We help both startups and existing businesses in both rural and urban regions. Typical businesses are for-profit businesses employing one or more individuals.
- Professional services
What kinds of businesses are not eligible for a loan?
Businesses that tend to lower the real estate value of a community (e.g., liquor stores, “hard” bars, gaming, etc.)
What are the Terms, Interest Rates, and Fees?
Loan terms vary according to:
- The size of the loan
- The planned use of funds
- The purpose of transaction
- Restrictions imposed by third party partners
Our average interest rates range between 8% and 12%. There are loan fees involved with transactions including: an origination fee, loan documentation preparation fee, and other fees related to perfecting our interest in the provided capital.
Small Business Lending Resources
- U.S. Department of Housing and Urban Development
- North Carolina Housing Finance Agency
- USDA Rural Development
- Small Business Technology Development Center
- Small Business Center
- Business Link North Carolina
- U.S. Small Business Administration
- NC Secretary of State
- Thrive North Carolina
- Charlotte Business Resources
- Raleigh SCORE
- Charlotte SCORE
- Michael Jacobs “Top 10 Steps to a Successful Small Business”