Definition: A special SBA 7(a) loan promising quick processing for amounts less
than $150,000
This loan program from the SBA makes applying for a loan of
$150,000 or less somewhat easy. "LowDoc" stands for "low
documentation," and approval relies heavily on your personal credit
rating and your business's cash flow.
The LowDow Program was created in response to complaints that
the SBA's loan application process for smaller loans was needlessly
cumbersome for both borrowers and lenders that participate in the
SBA's 7(a) General Business Loan Guaranty Program. The process
tended to discourage borrowers from applying and lenders from
making loans of less than $100,000.
LowDoc streamlines the loan application process for guaranteed
loans under $100,000. The approval process relies heavily on a
lender's experience and judgment of a borrower's credit history and
character. The primary considerations are the borrower's
willingness and ability to repay debts, as shown by their personal
and business credit history, and by past or projected cash flow. No
predetermined percentage of equity is required, and lack of full
collateral isn't necessarily a determining factor.
Applicants seeking less than $50,000 are required to complete
just a one-page SBA form. Those seeking $50,001 to $150,000 submit
the same short form, plus supply copies of individual income tax
returns for the previous three years and financial statements from
all guarantors and co-owners of the business. Commercial lenders
are likely to require additional paperwork to satisfy their own
requirements. The SBA guarantees a 36-hour turnaround on these loan
requests.