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How SBA Express loans work
They offer faster turnaround but could have higher interest rates than SBA 7(a) loans.
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This article was reviewed by Brad Stevens, a member of the Finder Editorial Review Board and 30-year veteran of the credit industry who specializes in rehabilitating struggling banks.
How the second stimulus bill affects Express loans
The second coronavirus stimulus package has made some temporary changes to how this loan program works:
- Loan amounts. The SBA will continue to offer Express loans up to $1 million.
- SBA guarantee. The SBA will guarantee 75% of loans $350,000 and lower — and 50% of loans over that amount.
These changes will remain in effect until September 30, 2021. At that point, the maximum loan amount will be permanently reduced to $500,000. Read our guide to how the second stimulus affects small businesses for more information.
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 a quicker turnaround with less paperwork. But they aren’t as large as standard SBA loans 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, $25,000 for Express Bridge loans
- Loan types: Term loan or line of credit
- Rates: prime + 4.5% to prime + 6.5%
- Loan terms: 5 to 25 years
What's in this guide?
What is an SBA Express loan?
An SBA Express loan is a business loan backed by the Small Business Administration (SBA) that offers shorter turnaround and less paperwork than a standard SBA 7(a) loan.
However, this means 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. And instead of the SBA deciding if you’re eligible for the loan, the decision is up to your lender.
3 types of SBA Express loans
SBA Express and SBA Export Express loans are part of the SBA 7(a) program, though they aren’t quite the same: 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 the standard 7(a) loan.
The SBA Express Bridge loan is a newer program meant to help businesses struggling during times of a presidential declared disaster, including the coronavirus outbreak.
| SBA Express loan | SBA Export Express loan | SBA Express Bridge loan | |
|---|---|---|---|
| Who it’s for | US-based small businesses | US-based exporters | US-based small businesses that have been negatively impacted by COVID-19 and other disasters |
| Maximum loan amount | $350,000 | $500,000 | $25,000 |
| Maximum SBA guarantee | 50% |
| 50% |
| Maximum interest rate |
|
|
|
| Loan term |
|
| Up to 7 years |
| SBA guarantee fee | 0.25% to 3.75% | 0.25% to 3.75% | Up to 2% |
| Forms | SBA Form 1919, lender forms | SBA Form 1919, lender forms | SBA Form 1919, lender forms |
| Collateral | May be required for $25,000+ | Varies by lender | Not required |
| SBA response time | Within 36 hours | Within 24 hours | Not set |
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 5 to 10 years for a term loan, up to 7 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 the prime rate 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. In many cases, that means another mortgage on the owner’s primary residence.
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.
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.
SBA Express Bridge loans
The Express Bridge loan program was put in place for businesses negatively impacted by the coronavirus. It allows small businesses to borrow up to $25,000 while waiting for an SBA disaster loan — provided you already have an existing banking relationship with a current SBA lender. Terms last up to seven years, and funds are repaid in full or in part by an SBA Economic Injury Disaster Loan, if your business is approved.
How long it takes
The SBA doesn’t specify a turnaround time, but it does state that disbursement of funds should take place no more than 90 days after the receipt of the SBA loan application.
Collateral and personal guarantee
The Express Bridge loan has the same personal guarantee and collateral requirements as the standard Express loan. The SBA will guarantee up to 50% of your loan amount.
However, a lender may choose to ask for collateral — it depends on your business and the lender’s risk assessment.
Can my business qualify for an SBA Express loan?
The 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 on top of those set by the SBA. 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.
How do I qualify for an SBA Express Bridge loan?
In addition to meeting the standard 7(a) requirements set by the SBA, your business must be located in a declared disaster area or in any state or territory that has been impacted by the COVID-19 emergency.
Find a lender that offers SBA loans
Below is a list of lenders that offer SBA loans. Just keep in mind if you’re interested in applying for an SBA disaster loan, you need to fill out an application directly on the SBA website.
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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.
Is the application process different for an Express Bridge loan?
In general, no. You must submit similar forms and provide the same type of information, along with how your business was impacted by the coronavirus pandemic. To find a lender offering the Express Bridge loan, reach out to your local SBA office.
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.
Bottom line
SBA Express loans can be faster than your typical SBA 7(a) loan, but they have higher interest rates because they 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 .
Frequently asked questions
Answers to commonly asked questions about SBA Express loans.
Are there SBA 504 Express loans?
No. Only Express loans backed by the SBA are part of the SBA 7(a) program.
Can my startup get an SBA Express loan?
No. To qualify for an SBA Express loan, your business generally needs to be cashflow positive, which often takes at least a year.
Are there SBA Express loans for veterans?
Not exactly. The SBA Veterans Advantage loan program comes with the same maximum loan amount, SBA guarantee, rates and terms as an SBA Express loan. But eligibility requirements are different, and there’s no guarantee fee.
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