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The SBA Express Loan program is a type of loan that is backed by the Small Business Administration. The significance of this backing is that it reduces the risk for lenders and opens up loans for businesses that otherwise might not be eligible where approval is within 36 hours and receipt of the funds within 90 days.
How Does An SBA Express Loan Work?
The SBA partners with intermediary lenders to offer SBA loans to companies. Loans must meet certain requirements, though lenders have some leeway to set rates and eligibility requirements.
General loan terms include:
- Maximum amount: $500,000
- The maximum maturities for SBA loans are as follows: 25 years for real estate - 10 years for equipment - 10 years of working working capital or inventory loan
- Interest rate: Up to prime rate plus 4.25%
- Collateral requirements: May be required for loans over $25,000
Invest Your Time - Lots of paperwork but you will see a return on this investment
Who Are SBA Express Loans Recommended For?
The SBA Express loan program gives businesses a way to borrow money quickly. Many lenders have stricter underwriting requirements thanks to the short time to make a lending decision.
In general, SBA Express loans are recommended for:
- Companies that need quick funding at low interest rates
- Businesses that have been around for a few years and have established operations
- Businesses that can show reasonable revenue and cash flow
- Businesses and business owners with fair or good credit and an established credit history
How Do I Qualify For An SBA Express Loan?
If you’re interested in an SBA Express loan, your business will need to meet SBA loan credit score requirements and other loan requirements including:
- Meet the SBA’s definition of a small business
o The requirements depend on your industry and are based on revenue and/or number of employees
- Be a for-profit business operating in the United States or its territories
- Be at least 51% owned by a US citizen or lawful permanent resident
- Not operate in an ineligible industry
- Not have outstanding federal debt, such as tax debt or student debt
- Have reasonable owner equity to invest
- Have acceptable credit - 650 or above is common though it can vary from lender to lender
- Have already invested financial resources, such as personal assets, in the business
- Have strong annual revenue ($100,000 or higher)
Individual lenders are free to set their own requirements, with some restrictions. However, if you meet the above you have a good chance of qualifying for a loan.
Where To Get An SBA Express Loan?
If you’re thinking about applying for an SBA Express loan, your first step is to find a local SBA intermediary lender. The SBA doesn’t make loans directly. Instead, it offers funds and guarantees to partner lenders that make loans on its behalf.
SBA lenders include regional and national banks as well as non-profits. You can find a lender on the SBA website.
Some popular lenders for SBA loans include:
- Citizens Bank
- TD Bank
- U.S. Bank
- Northeast Bank
- Associated Bank
Each lender will have its own application process and underwriting requirements. Common information you’ll be asked for includes:
Historical and projected financial statements
- Your business credit report
- Business and personal tax returns
- A business plan
However, every lender should require SBA form 1919, which asks for information such as:
- Business Ownership information
- SBA loan application history
- How you will use your SBA Express loan
- The number of employees and years self employed
- Short-term and long-term working capital
- Accounts payable
- Purchasing inventory
- Seasonal financing
- Construction financing
- Purchasing real estate
- Purchasing equipment, furniture, machinery, supplies, and materials
- Covering construction and/or renovation costs
- Establishing or acquiring a new business, or expanding an existing business
- Refinance a debt that no longer meets your business’ needs
- Refinance to a new loan that reduces the loan payment by 10% or more