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SBA Express loans
Federally-sponsored loans for small business owners don't have time for your typical SBA loan.
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.
The Small Business Administration (SBA)’s Express loan program is a government-guaranteed financing option for small business owners looking for a loan under $500,000 that requires less work.
You can often get an SBA Express loan within 30 days. But it guarantees a lower portion of the loan, is available at lower loan amounts and you may pay a higher rate than you would on a 7(a) loan.
SBA Express loans are smaller and faster than other 7(a) loans
The SBA Express program offers relatively simple loans and lines of credit to small businesses for most business uses. Here’s a snapshot of how this loan program works:
- Maximum loan amount: $500,000
- Maximum interest rate: 10%
- SBA guarantee: 50%
- Maximum loan term: 10 years — with exceptions for real estate and fixed assets
- SBA turnaround time: 36 hours
The maximum loan term of 10 years applies to both SBA Express term loans and lines of credit. Businesses that take out an SBA Express loan to purchase a fixed asset will have a term based on the useful life of the asset. The maximum term for real estate loans is around 25 years.
Maximum interest rates and fees
Like with other SBA loan programs, the maximum interest rates and fees depend on how much you borrow.
- Loans under $50,000: Prime + 6.5%
- Loans over $50,000: Prime + 4.5%
The SBA was not charging any guarantee fees until October 1, 2021. Since the SBA guarantee fee waiver ended, SBA Express loan borrowers must pay between 0.25% to 3.75% of the guaranteed portion of the loan at closing. The guarantee fee depends on how much you borrow and the loan term.
No additional requirements for SBA Express loans
SBA Express loan requirements are the same as any SBA 7(a) loan program — there are no additional criteria to receive a faster turnaround. The government requires borrowers to meet the following requirements:
- Meet the SBA’s size standards for your industry
- Operate a businesses in an eligible industry
- Run a for-profit enterprise in the United States
- Demonstrate need for funding
Many lenders will also set additional requirements on top of the SBA’s basic criteria.
Typically, your business must be profitable and up and running for at least two years. It must also must have few debt obligations compared to revenue. And business owners must have good credit — usually a personal credit score of at least 670.
SBA Express loan collateral requirements
The SBA’s collateral requirements are also the same as your typical 7(a) loan.
- Loans of $25,000 and under have no collateral requirements.
- Loans over $25,000 are collateralized to the greatest extent possible.
Generally, lenders rely on their collateral policies for non-SBA loans on Express loans over $25,000. You won’t be turned down if your small business doesn’t have enough assets to fully collateralize the loan — as long as you can demonstrate your ability to repay by other means.
SBA Express loan proceeds can cover most financing needs
You can use your SBA Express loan for the same expenses as an SBA 7(a) loan. Generally, these include the following types of expenses.
- Working capital
- Refinancing debt
- Business acquisition or change of ownership
- Real estate purchases or improvements
Ask your lender about any restrictions on how you can use the loan before you apply.
Apply through an SBA 7(a) lender
You can apply for an SBA Express loan through most SBA-approved lenders — though make sure it offers Express loans, not just standard 7(a) loans. Typically, the turnaround time on an Express loan is around 30 days. But there are a few ways to speed it up.
- SBA-preferred lenders, like Chase or Citizens Bank, that offer SBA Express loans have the authority to approve your application without waiting for SBA approval.
- Lenders that offer an online application may have an even faster turnaround than your typical SBA lender — especially if they’re also preferred.
- Providers like SmartBiz can reduce the turnaround time by weeks by helping you find an SBA-preferred lender and completing the application. But they usually charge a packaging and broker fee.
The SBA Express loan application is similar to an SBA 7(A) loan application. Along with the application form, you typically need to submit the following documents:
- SBA Borrower Information Form 1919 for all business owners
- SBA Personal Financial Statement Form 413 for all business owners and cosigners
- Business financial statements
- Personal and business tax returns
- Business certificates and licenses
- Past business loan application records
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When to get an SBA Express loan
An SBA Express loan makes the most sense when you’re looking for low-cost financing for an existing business that can’t qualify for a bank loan. If you don’t have time to spend on a standard SBA 7(a) loan application, an SBA Express loan can be a more realistic option for low-cost financing.
SBA Express loan alternatives
In some cases, other business loan options can be a better fit. Consider these options if an SBA Express loan doesn’t meet your business’s needs.
- An SBA 7(a) loan offers financing for a project that costs more than $500,000 and features lower interest rates.
- A microloan can fund startup expenses, unlike an Express loan. These small-dollar business loans are available through nonprofit lenders.
- An SBA disaster loan can assist your business when you need help recovering from a disaster like COVID-19.
- An online business loan can send funds to your business bank account within days, not weeks.
In some cases, an alternative to business loans may be a better option.
SBA Export Express loans for international businesses
(Source: Page 359 of the SOP, plus this quick reference sheet to confirm some slightly different language: https://www.sba.gov/sites/default/files/articles/FY_2019_LoanQuickReference.pdf )
The SBA Export Express loan program offers term loans and lines of credit as a a part of the SBA’s general trade financing program. Here’s how they differ from your typical SBA Express loan:
- Intended to cover expenses related to expanding the exporting side of a small business
- Higher SBA guarantee of 90% for loans of $350,000 or less and 75% of loans over $350,000
- Shorter line of credit term of seven years — otherwise terms are the same as Express loans
Export express loans can also be more difficult to find. Start your search with providers that specializes in international trade financing.
SBA Express Bridge loans are no longer available
The SBA Express Bridge loan program offered short-term loans to small businesses waiting for approval on an Economic Injury Disaster Loan (EIDL) due to COVID-19. While you EILD applications are still open, the SBA Express Bridge loan program expired on March 13, 2021.
Here’s how it used to work:
- Loan amounts stopped at $25,000
- The SBA guaranteed up to 50% of loan
- Loan terms ran for as long as seven years
While the SBA directly funded EIDLs, Express Bridge loans were were only available through an SBA Express lender. These loans may become available again during other disasters. If the program reopens, they will be available for up to six months after an official disaster declaration.
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.
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