The Ultimate Guide To SBA Express Loans

SBA Express loans have maximum borrowing limits of $500,000. Businesses that need access to more capital should consider taking out a 7(a) loan, which provides up to $5 million.

The SBA guarantees up to 85% of an SBA 7(a) loan, while guaranteeing only a maximum of 50% of an Express loan.

As a result, interest rates are lower for 7(a) loans. Interest rates for the 7(a) loan are the prime rate plus a markup of 2.25%-4.75% based on the amount borrowed and term length.

Interest rates for the SBA Express loan are the prime rate plus a markup of 4.5%-6.5%.

The biggest advantage of the SBA Express loan is that a loan approval decision is guaranteed within 36 hours. The average turnaround time for loan approval for a 7(a) loan is 5-10 business days. Businesses that want to know if they’re going to receive a loan or if they need to seek alternative options should apply for the Express loan.

One final thing to remember is that even though an approval decision is faster with an Express loan, the entire funding process can still take several weeks or longer from start to finish.

The standard SBA Express loan can be structured as a term loan or revolving line of credit. It can be used for nearly any purpose, including:

• Working capital
• Commercial real estate
• Equipment
• Inventory
• Debt refinancing

This loan is ideal for most small businesses, provided all SBA and lender requirements are met.

If your business deals in exports, the SBA Export Express loan may be a good option for you.

The SBA supports American export activity through the SBA Export Express loan program. While other SBA loan programs guarantee 50% to 85% of the loan amount, the SBA Export Loan guarantees a maximum of  90% of the loan.

Loan proceeds can be used for financing direct or indirect export activities, as well as for other business purposes. An approval decision is guaranteed within 24 hours. Interest rates, terms, and borrowing limits are the same for SBA Express and Export Express loans.

In order to qualify for an SBA Express loan, you’ll need to meet the basic requirements of the SBA. Your business must:

• Engage or plan to engage in operations in the United States or US territories
• Be a for-profit business
• Qualify as a small business based on SBA rules for the number of employees and revenue
• Have a legitimate usage for loan proceeds
• Be unable to obtain funding elsewhere

Your business must also be in an eligible industry. Ineligible industries include:

• Lenders
• Investors
• Multi-level sales
• Gambling businesses
• Government-owned businesses
• Speculation-based businesses
• Religious institutions
• Nonprofit organizations
• Businesses engaged in illegal activities

To receive an SBA loan, including the Express loan, you must have a good personal credit score and history. While credit requirements vary by lender, a minimum credit score of 680 gives you the best odds of qualifying.

You must be prepared to explain any negative items on your credit report, including late and missed payments. Foreclosures, bankruptcies, and previous defaults on government loans may prevent you from receiving an SBA loan.

Collateral is not required for loans up to $25,000. For loans above this amount, collateral (typically in the form of business assets) may be required.

A personal guarantee is required and must be signed by every owner that has at least a 20% stake in the business. This personal guarantee will hold the owners personally liable for the debt if the loan goes into default.

To qualify for an SBA Express loan, you’ll need to prove to the lender that you’re able to repay the loan. You’ll need to provide documentation to show ownership and the financials of your business. While requirements vary by lender, you should gather documents like:

• Federal income tax returns
• Business permits and licenses
• Balance sheets
• Profit and loss statements

Startups and new businesses may need to provide alternative documentation, including business plans, proof of industry experience, and financial projections.

Eligible small business owners can receive up to $500,000 through the SBA Express loan program.

Businesses that need $500,000 or less should consider applying for the SBA Express loan. Loan approval is guaranteed within 36 hours, while approval for an SBA 7(a) loan may take several weeks. However, businesses that are willing to wait and need a larger loan should look into the 7(a) program.

SBA loans have a lengthy and difficult application process, and the SBA Express loan is no exception. Borrowers must meet the requirements of the SBA and the lender, which includes a good personal credit score and history.

While borrowers with scores as low as 640 may qualify for an SBA loan, it’s generally recommended to have a minimum personal credit score of at least 680 to receive an SBA Express loan.