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How SBA Express loans work
They offer faster turnaround but could have higher interest rates than SBA 7(a) loans.
One of the biggest drawbacks of applying for a Small Business Administration (SBA) loan is the application. It’s more detailed than most other loans and can take months to complete.
For faster funding, SBA Express loans could offer faster turnaround with less paperwork for businesses. But they aren’t as large as your typical SBA loan and could have higher interest rates. Plus, not every business can qualify.
SBA Express loans in a nutshell
- Maximum loan: $350,000 for Express loans, $500,000 for Export Express loans
- Loan types: Term loan or line of credit
- Rates: Prime + 4.5% to prime + 6.5%
- Loan terms: Five to 25 years
What’s an SBA Express loan?
An SBA Express loan is a business loan backed by the Small Business Administration that offers shorter turnaround and less paperwork than a standard SBA 7(a) loan.
Loan amounts are smaller, maximum interest rates are higher and the SBA often guarantees a smaller percentage of the loan you end up qualifying for. Instead of the SBA deciding if you’re eligible for the loan, the decision is up to your lender.
The 2 types of SBA Express loans
Both SBA Express and SBA Export Express are part of the SBA 7(a) program, though they aren’t quite the same. The main difference is that SBA Express loans are for just about any eligible US-based business, while SBA Export Express loans are solely for exporters. Both have the same fees and eligibility requirements as your standard 7(a) loan.
| SBA Express | SBA Export Express | |
|---|---|---|
| Who it’s for | US-based small businesses | US-based exporters |
| Maximum loan amount | $350,000 | $500,000 |
| Maximum SBA guarantee | 50% | Less than $350,000: 90% $350,000+: 75% |
| Maximum interest rate | Less than $50,000: Prime + 6.5% $50,000+: Prime + 4.5% | Less than $50,000: Prime + 6.5% $50,000+: Prime + 4.5% |
| Loan term | Term loan: 5 to 10 years Line of credit: Up to 7 years Real estate loan: Up to 25 years | Term loan: 5 to 10 years Line of credit: Up to 7 years Real estate loan: Up to 25 years |
| SBA guarantee fee | 0.25% – 3.75% | 0.25% – 3.75% |
| Forms | SBA Form 1919, lender forms | SBA Form 1919, lender forms |
| Collateral | May be required for $25,000+ | Varies by lender |
| SBA response time | Within 36 hours | Within 24 hours |
1. SBA Express loans
SBA Express loans work like a smaller, faster SBA 7(a) loan. Your business is limited to borrowing $350,000 for most legitimate business uses, like working capital, buying equipment and even purchasing real estate.
Like a standard SBA 7(a) loan, loan terms are five to 10 years for a term loan, up to seven years for a line of credit and up to 25 years for real estate loans. An SBA Express loan can be more expensive than a 7(a) loan, with rates ranging from prime plus 4.5% to prime plus 6.5%.
How long it takes
The SBA generally responds within 36 hours of receiving your application, compared to the one to two weeks you can wait for other 7(a) applications. However, lenders can take one to three months to process your application.
SBA Express loans might not be ideal for emergency funds, but they could be a good resource for small businesses looking for working capital at competitive rates. Reduced paperwork also means less time spent on the loan application.
Collateral and personal guarantee
A drawback of an Express loan is that the SBA guarantees only 50% of the amount you borrow. You and anyone else who owns more than 20% of the business might have to back the other half of the loan with personal assets.
While your lender isn’t required to ask for collateral if you’re borrowing less than $25,000, it might ask you to back your loan if it’s more than that amount. However, the type of collateral you need to provide varies by lender.
2. SBA Export Express loans
The SBA Export Express program offers term loans and lines of credit for export businesses that need funds to get off the ground or expand. It’s a faster alternative to the SBA’s Export Working Capital loan, allowing your business to borrow up to $500,000 with the same rates and terms as an SBA Express loan.
How long it takes
The SBA typically responds to Export Express applications within 24 hours, compared to the five to 10 business days it takes on an Export Working Capital loan. And like the SBA Express loan, you need to fill out the SBA Form 1919 and anything else required by the lender. In contrast, SBA Export Working Capital loans require borrowers to submit a more comprehensive form that’s several pages long and requires additional documentation.
However, you might wait from one and three months for your lender to make a decision. In other words, it’s also not ideal for emergencies but generally faster than the alternative.
Collateral and personal guarantee
Because the SBA requires no collateral for its Export Express program, whether you need to secure your loan is up to your lender. In comparison, all SBA Export Working Capital loans require borrowers to put up inventory for collateral.
The SBA offers a 90% guarantee for loans of under $350,000 and 75% for loans of $350,000 or more. While this is higher than your standard SBA 7(a) guarantee, SBA Export Working Capital loans come with a 90% guarantee no matter how much you borrow.
Can my business qualify for an SBA Express loan?
Eligibility requirements for an SBA Express loan are generally the same as an SBA 7(a) loan. However, your lender may impose its own conditions for you to meet. In general, you or your business must:
- Have good credit. Typically, business owners need to have a credit score of at least 650 to qualify for an SBA Express loan.
- Earn more than your debt obligations. Generally, your business can’t qualify for an SBA Express loan if you have a debt service coverage ratio (DSCR) of less than 1.15.
- Be profitable. Your business likely won’t qualify for an SBA Express loan if you’re just breaking even. You might want to check out a SBA Microloan instead.
- Have strong revenue. Many SBA lenders require minimum revenue amounts for Express loans.
SBA Express loans of $25,000 or more might also require collateral, though it might not need to be equivalent to the total amount you’re borrowing.
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Updated February 27th, 2020
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How do I apply for an SBA Express loan?
The application process for an SBA Express loan varies by lender. But you can expect to follow general steps:
- Talk to your lender to discuss your business’s eligibility. You may be able to complete a prequalification form to get an idea of your chances of approval, as well as potential rates and terms.
- Complete the application and SBA Form 1919. Form 1919 requires basic information about your business and anyone who owns more than 20% of the company.
- Your lender submits your application to the SBA. Typically, the SBA responds within 36 hours for SBA Express loans and 24 hours for SBA Export Express loans.
- Submit relevant documents to your lender. Your lender might ask to see your business plan, financial projections and personal and business tax returns.
- Wait for your lender to review your application. The SBA doesn’t offer guidelines on how long this can take, but you’ll often wait 30 to 90 days to get your funds.
Why consider an SBA Express loan?
- Less paperwork. SBA Express loans often require less paperwork than your typical SBA 7(a) loan.
- Smaller loan amounts. If your business doesn’t need millions of dollars in financing, why do all that extra work?
- Collateral not always required. Generally, it’s up to your lender to decide whether your business needs to provide collateral.
- Often fast. The SBA responds to Express loan applicants within two days, and you don’t have to spend as much time completing all those forms.
Why look at other options?
- Higher rates than other SBA loans. Other SBA 7(a) loans have interest rates that max out at prime + 2.25%.
- Not for emergencies. The SBA might respond faster, but even Express loans can take a few months to process.
- Smaller SBA guarantee. The SBA offers a 50% guarantee on SBA Express loans and 75% on larger Export Express loans.
- Not for startups. Businesses looking for startup funding might want to consider an SBA Microloan instead.
SmartBiz: A faster way to apply for an SBA Express loan
SmartBiz is an online marketplace that connects businesses with SBA lenders and can even help you complete your application — for a fee. If your business doesn’t qualify for an SBA loan, it can connect you with another lender that may be willing to provide funding.
Business owners looking for fast SBA funding on the smaller side might want to consider applying through SmartBiz. It can get you funds in as fast as seven days after you complete your application. It also cuts out the time you’d spend completing SBA loan forms.
- Eligibility requirements. 650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
Bottom line
SBA Express loans can be faster than your typical SBA 7(a) loan, but they have higher interest rates and offer a smaller loan guarantee. To reduce the time spent filling out forms and get your funds even faster, you might want to consider applying through a service like SmartBiz.
Want to learn about your other options? Read our guide to SBA loans or learn more about business financing .
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