The SBA Express Loan program also solves this conundrum but in addition solves it quickly. A normal SBA loan can take quite a long time but the express loan program will approve you in 36 hours and receipt of the funds within 90 days.
Before you dive in:
- Invest Your Time - Lots of paperwork but you will see a return on this investment
- Get all your business financials organized first
- Perseverance - Keep Going - You’ll get there
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
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
Types Of SBA Express Loans
There are three main types of SBA Express loans, each with its own terms and conditions.
SBA Express Loan
SBA Express loans are loans that offer a one-time distribution of funds to businesses in need of cash. Small businesses can borrow up to $500,000 for a term of ten years (twenty-five for real estate purchases).
This is the basic form of an SBA Express loan.
SBA Express Line Of Credit
An SBA Express line of credit gives small businesses access to a line of credit with a short approval process.
Like other lines of credit, businesses can take cash out of their credit line as they need it. You’ll only pay interest on your business’s line of credit when you have an outstanding balance. This makes a line of credit a good choice when you have a company that may need regular access to additional cash.
The primary difference between an SBA Express line of credit and a loan is that lines of credit typically have repayment terms of up to seven years instead of ten.
SBA Export Express Loan
SBA Export Express loans are designed specifically for companies involved in exporting goods to other countries.
These loans are very similar to SBA Express loans. The primary differences are that the SBA offers greater guarantees to lenders, reducing their risk and that the response time is reduced to just 24 hours.
If your company qualifies as an exporter, these loans can be one of the fastest ways to get funding from the SBA Express loan program.
What Can I Use An SBA Express Loan For?
One of the benefits of SBA Express loans is that you can use them for a variety of purposes, including:
- 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
You can also use them to refinance existing debt. However, to refinance using an SBA Express loan you must either:
- Refinance a debt that no longer meets your business’ needs
- For example, converting a term loan to a line of credit
- Refinance to a new loan that reduces the loan payment by 10% or more
Pros And Cons Of An SBA Express Loan
Before applying for an SBA Express loan, consider the benefits and drawbacks.