What is an SBA Express Loan?
An SBA express loan is a loan backed by the Small Business Administration (SBA) which are similar to SBA 7(A) loans, except that they require less documentation, and are for smaller amounts- up to $350,000. Because of their lighter documentation requirements, SBA express loans are usually processed in 36 hours or less, while actual funding time is typically between 1 – 3 months. SBA express loans are also flexible: they can be used for a line of credit, a commercial real estate loan, or a working capital loan. And each of these uses will create a different payment term. Working capital loans haves terms anywhere between 5 – 10 years, commercial real estate loans have 25-year terms, and a line of credit will have a term of 7 years. Another kind of SBA express loan is the SBA export express loan, intended for businesses that export goods, and can be for amounts up to $500,000. SBA review times for export express loans are even shorter, at 24 hours or less. SBA express loans also differ from SBA 7(A) loans in terms of the portion which the SBA guarantees. While 7(A) loans can be for amounts of up to $5 million and have up to 85% of their principal covered by the SBA, express loans are only up to 50% covered. However, this difference is not likely to dissuade lenders, given the significant difference in loan size.
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SBA express loans tend to have higher maximum interest rates than the SBA 7(A) loan, as they are for smaller amounts. While SBA (7)A loans have interest maximums set at 2.75% above prime, express loans are 4.5% above prime for loans over $50,000, and 6.5% above prime for loans of $50,000 or less.
SBA express loan lenders like to see credit scores of at least 680. You can raise the value of your credit score simply by paying your monthly paying bills on time.
How to Get an SBA Express Loan
Beyond a good credit score, SBA express loan lenders will want to see that your business has been operating for at least 2 years, and is doing well. Similarly, you will need to have sufficient revenue to ensure lenders that you will be able to make regular loan payments. For loans above $25,000, lenders may also require collateral. To apply for an SBA express loan, you will need to provide:
- A business plan stating how you intend to use your loan.
- Statements of your personal finances, as well as personal and financial history, including other loan applications.
- Business licenses or certificates.
- The most recent 3 years of your personal and business tax returns.
- Personal resumes, showing at least a 20% stake in your company.
- Statements of your business’ overview and history, as well as all your business leases.
In addition, the SBA has specific documents that you will be required to fill out. These include: forms which evaluate your financial ability, as well as that of your spouse and business partners; forms providing your basic information as a borrower; and forms of personal history assessing your character.