GNEC Loan Programs

Absolutely not! NONE of our loan programs have any penalties or extra costs of any kind for being paid early. A borrower can pay off the loan in full or send in extra money at any time without any kind of penalty or extra charge.

There is only one fee associated with our loans:

  • $100 document preparation fee for DreamMaker loans ($30,000 or less)
  • $250 document preparation fee for Business Builder loans (over $30,000)

 We will collect this fee AFTER your loan has been approved and only if you decide you want to close. Therefore, if your loan is denied for any reason, you will NOT owe us any money. Even if you are approved and then change your mind, you will not be charged this fee. This is a “closing fee” to cover our costs of document preparations and filing fees. One more way we are determined to help the small business owner.

Loan Qualifications

Yes. We can provide business loans for businesses that are legally registered to or operate from the home (or: permitted to operate from or be registered to the home). We will qualify these businesses in the same way as if they were a brick-and-mortar business.

Just like all traditional lenders, the GNEC underwriters will look at the overall strength (or weakness) of the loan applicant based on the traditional “C’s of lending”.

  • Capacity: ability to pay back the loan
  • Credit: payment history of the borrower(s), NOT just the credit score
  • Collateral: assets used as a guarantee for the loan (for any loan over $30K)

Capacity reflects the borrower’s ability to repay the loan. A borrower may earn substantial income, but if their monthly obligations are equally high, they may not have the “capacity” to manage additional debt. Underwriters must confirm this through documentation — such as paystubs, bank statements showing consistent income, tax returns with W-2s, and/or merchant statements. The goal is to verify the ability to meet existing obligations PLUS the new loan payment.

 At GNEC, our approach is more flexible than traditional business loan underwriting. We consider ALL sources of income to help the borrower qualify, not just business income. We also look at deposits into bank accounts, not only what is reported on tax returns.

The borrower(s)’ credit history and FICO scores are VERY important to all lenders.  Most lenders will require a minimum credit score and if a borrower is below that threshold, the loan will be automatically denied, or the tier will be changed to higher interest rates. 

GNEC does not automatically deny an application based solely on credit score. We recognize that scores may be impacted by factors such as high credit card utilization or isolated late payments with reasonable explanations. What raises concern is a consistent pattern of late payments without acceptable reasons. Additionally, we cannot approve applicants who have filed for or been discharged from bankruptcy within the past two years.

Late payments (or other derogatory information) WILL need a written explanation.  Sometimes life circumstances make things inevitable.  That may be OK, as long as the explanation makes sense to our underwriters and the issues which caused those late payments have been resolved.

It is a “soft pull” and therefore us checking your credit will not affect your credit score.  

We typically use machinery, equipment, or real estate as collateral. A pledge of collateral as a guarantee for the loan is required on ALL Business Builder loans (loans over $30,000).  The Business Builder loans must be 100% collateralized.  The value given to the collateral used as the loan guarantee will be set at 80% of its fair market value.

For example: If purchasing business equipment, the loan amount for the equipment will be no more than 80% of the cost. So, if the equipment being purchased costs $50,000, the most GNEC will be able to lend against it is $40,000 (80% of the $50,000). If a borrower is pledging real estate as collateral, the amount that can be lent against it will be 80% of the value of the home minus the mortgage(s).

So, a home worth $500,000 with a $350,000 mortgage will support a loan up to $50,000.

$500,000 home value x 80% = $400,000, and then $400,000 – $350,000 owed on the mortgage = $50,000

In cases where the borrower’s qualifications are exceptionally strong and an exception is granted by the external credit committee, inventory or accounts receivable may be accepted as collateral. However, only a reduced percentage of their value will be considered.

No; no exceptions.  All loans over $30,000 (Business Builder loans) will require a pledge of collateral as a guarantee for the loan.  Without proper collateral available, the loan amount will be limited to $30,000 (DreamMaker Loan Program).

Application Process

Our application process is straightforward.  The first thing you want to do is determine which loan program you would like to apply for depending on the loan amount (DreamMaker or Business Builder).  Remember that Business Builder loans will require a pledge of collateral as a guarantee for the loan.  If you do not have any collateral to pledge as a loan guarantee, you can only apply for the DreamMaker loan (maximum $30,000). 

Select the appropriate link by loan type and begin the application process. DreamMaker Loan (from $5,000 to $30,000) or Business Builder Loan (over $30,000 and up to $100,000).

You will be asked to set up an account.  Use your email as your username and create a password.

Each page/form of the application will have additional information (explaining in detail) what is needed.  Please read the notes to make sure you are properly providing what is being requested.

No. We can only provide one loan at a time for any borrower(s). Loans are filed in our records based on the owner’s Social Security number (or ITIN).

Yes. But we can only offer 1 outstanding loan at a time. So if a borrower wants access to more money through a loan, the borrower(s) must pay off the outstanding balance on their current GNEC loan at the closing. In other words, if you presently owe $10K on your current loan and would like an additional $15K, you can apply for $25K. We’ll have your $10K balance paid off at closing and you will be given the $15K difference. Your new loan would be $25K. Also note that you must wait at least 12 months and have a record of ALL on-time payments to be able to apply again for additional money.

In addition, GNEC is not designed to be your future “go-to” lender. We have limited funds and are here to help businesses in that period before they can easily access money from traditional lending sources. Unless we get an exception approved, we will only provide 2 loans during the life of a business.

Business documentation:

  1. Certificate of Formation/Incorporation for your business
  2. IRS letter showing your company’s EIN (Employer Identification Number)
  3. Business tax returns for the last 3 years
  4. Business bank statements for the last 12 months
  5. Business plan (if you have it ready)

 

Personal documentation:

  1. Personal tax returns for the last 3 years
  2. Personal bank statements for the last 12 months
  3. Copy of government ID with photo of each business owner (20% or more ownership)

Any person who is an owner of 20% or more of the corporation must be part of the application process. This means that everything requested and required will pertain to them also. GNEC will need each owner’s permission to run their credit, their photo ID’s, their personal tax returns, etc.

Each page of the application has detailed instructions and lots of helpful information to help you as you fill out the application.  PLEASE read the instructions on every page before commencing on that page; it will help you tremendously.  If there is anything we have not covered or if you are unsure, please feel free to reach out to us right away.  We are here to help.  In addition to myself, the following people are here to help you with questions regarding the application:

Vincent Tanner (English) – vtanner@GNEC.org

Fabian Benalcazar (English or Spanish) – fbenalcazar@GNEC.org

As you submit your information, our underwriting team will look at it and mark that task/item “complete”.  You will receive an e-mail (or text) alerting you that it has been checked off.  If there is anything missing or incorrect in your submission, we will send you an e-mail (or text) letting you know what was wrong and what is still needed.  Either way, you will be informed every step of the process.  We are here to assist you.  Please allow us 1-2 business days to review and clear the items as you submit them.

Whenever you go back online to your application account, you will see at a glance which items are still outstanding and which items are checked off as complete.  Your goal is to complete all the outstanding items as soon as possible so we can get your file into our underwriting review.  Keep in mind, that anything you recently submitted may not be marked as “complete” yet.  It may take 1- 2 business days to review any document or form you have submitted.  We are working with many files and submissions at a time.  The faster you complete your checklist; the sooner we can move your file into underwriting review.

For all questions regarding the application please contact:

Vincent Tanner (English) – vtanner@GNEC.org

Fabian Benalcazar (English or Spanish) – fbenalcazar@GNEC.org

Approval Process And Getting Ready For The Closing.

Applications which have been completed (where everything requested has been submitted and marked-off as complete) are then underwritten and scheduled for an in-house review for the following week. These in-house reviews for approval generally take place each Tuesday for all the applications that were completed and underwritten the week before. 

Once we decide on Tuesday, we will send out a notice within 24 hours via email. If you’re approved with a DreamMaker loan ($30k or less), we will send you a Commitment Letter outlining the terms of the loan and the items needed in order to close.  If denied, we will send you a denial letter. 

 

If you are applying for a Business Builder loan (over $30k), we will let you know that the first part of the approval process has been met, but we then must schedule an external review with our Credit Committee.  This process will delay closing from a few weeks to possibly over a month as we have to coordinate availability for 7 different bankers from 7 different companies.

All closings take place on Thursdays at our office at 211 Warren St. (suite 409), Newark, NJ.  The time of the closing will be scheduled by our closing department AFTER all closing conditions are submitted.  You will receive an email from the closing department letting you know the time the closing is scheduled for. 

There are always a few closing conditions requested before we can close.  These are the typical closing conditions (although on rare occasions there may be more):

  • After you review and approve, please sign the commitment letter (which will outline the terms of the loan).
  • We’ll need payment of the documentation preparation fee (closing fee)
  • We’ll need a “Void” check from your business checking account.  This will be used for the ACH draft (Automatic Clearing House).  All monthly payments are due on the 1st of the month and are paid automatically through deductions from your business checking account.
  • Business Liability Insurance to list us as “Additional Insured” or “Loss Payee”.  The wording will depend on the business loan program (whether we are taking collateral as a guarantee for loan).  We will provide you with the instructions for your insurance agent upon approval of the loan.

Yes.  ALL businesses will be required to have Business Liability Insurance before we can close.  As a business owner, this is something which is necessary.  Liability Insurance protects a business from an unforeseen event or lawsuit.  We will send you simple instructions for you to forward to your insurance agent. 

Yes. ALL businesses will be required to have Liability Insurance before we can close. As a business owner, this is something which is necessary. Liability Insurance protects a business from an unforeseen event or lawsuit. Keep in mind, even if a lawsuit against your business is frivolous, without Liability Insurance, you may need to hire an attorney and take time away from the business to settle the claim. We will send you simple instructions for you to forward to your insurance agent. Being that we are providing you a business loan, we need to be listed on your policy.

The day of the closing, all the business owners (of 20% or more ownership) must be present to sign as borrower.  Each borrower must bring in a government issued photo ID (Driver’s License or Passport).  They must also bring in their Social Security Card (or ITIN documentation).  They will need to provide the name, address and phone number of a relative NOT living with them for us to keep on file (in case we can’t reach you).

What Happens After The Closing

The loan payments will be dependent on the loan amount and the years to pay back the loan.  The interest rate is the same (currently at 5.99% fixed rate) for both our loan programs.  Use these figures as a very good estimate of your monthly payments:

Multiply $23.48 for every $1,000 borrowed for 4 years (DreamMaker loan)

Multiply $19.33 for every $1,000 borrowed for 5 years (Business Builder loan) 

For example:    If borrowing $30, 0000 (DreamMaker loan) over 4 years, the payment would be $704.40

                                30 x $23.48 = $704.40  (the actual payment would be $704.41… very close)

You will not need to write a monthly check. All payments will be made via ACH draft (Automatic Clearing House) on the 1st of every month.  This is why we will require a “Void” check from your business account; to know which account we will use to automatically make your payments. 

Absolutely yes.  We have NO pre-payment penalties on our loans.  You can send additional money to every monthly payment or send a lump sum at any time.  Any extra money paid will be applied to the principal balance you owe at the time.  All you need to do is send us an email for confirmation, so we have your desire in writing.  Our loans do NOT have any pre-payment penalties nor charges of any sort.  

Yes.  ALL your loan payments (whether made on time or late) will be reported to the credit agencies. Of all the “C’s” of lending, Credit is generally the MOST important when it comes to borrowing money.  Making on-time payments help increase your credit score and credit worthiness over time.  It will make it much easier to obtain future loans.  Unfortunately, making late payments will have the opposite effect. It will make it much harder to obtain additional money in the future for your business.

If you have a question that is not addressed here, please let us know. Email us at OVillares@GNEC.org, and we will answer it within 24 hours and perhaps add it to this list of Q&A’s. 

Thank you.