What is an SBA Express Loan?

Our guide to SBA express loans for businesses

The U.S. Small Business Administration (SBA) provides a variety of resources and opportunities that help entrepreneurs get the help they need to launch their small business. The SBA collaborates with commercial lenders to offer multiple loan programs that offer funding for small businesses. The SBA Express loan is part of the 7(a) loan program and has certain eligibility requirements that borrowers must meet in order to be approved.

It is vital to learn about SBA loans so that you can determine if an SBA Express loan is the right choice for you, or if you should continue to explore other loan options like alternative online lenders. Below, we will offer a bit more information about this type of loan and which types of businesses can benefit from the SBA Express loan.

What You Need to Know About SBA Loans

Before we discuss the SBA Express Loan, it’s important to understand how SBA loans work and what the application process is like. The SBA does not directly provide the actual funding for these business loans. Instead, they work with select traditional lenders that agree to meet their guidelines to offer funding to small businesses.

The SBA provides a partial guarantee to the lender, agreeing to pay back a certain amount of the loan if the borrower defaults on their payments. The SBA basically acts as a co-signer, reducing the risk for lenders. This can help small businesses that may not have the credit history or collateral to receive a traditional loan get the funding they need.

What is the SBA Express Loan?

Now that you know a little bit about SBA loans, let’s talk about the SBA Express loan. There are two 7(a) loan process options, each providing a different time frame. The SBA Express process offers borrowers an expedited turnaround time so that they can get a faster decision. Borrowers should expect to hear back on the loan decision in just 36 hours.

The SBA Express loan follows the same general standards as the 7(a) loan program. According to the SBA:

  • The maximum loan amount for borrowers is $350,000.
  • Revolving lines of credit are available for up to seven years.
  • Lenders and borrowers negotiate the interest rate, which can be fixed or variable and tied to the prime rate, LIBOR, or optional peg rate. However, they can’t exceed the SBA’s maximum rates. (Up to 6.5% over base rate for loans of $50,000 or less and up to 4.5% over base rate for loans over $50,000.)
  • Typically, lenders use their own forms and procedures for processing the loan.
  • For loans up to $25,000, lenders are not required to take collateral, but they may use their existing collateral policy for loans between $25,000 and $350,000.

Benefits of the SBA Express Loan

Obtaining an SBA loan can benefit small businesses in several ways. Getting backed by the SBA can increase the likelihood that a small business will be approved for funding by a traditional lender. In addition, businesses can use the funding that they receive to meet many different business needs, including start-up and expansion costs.

A unique benefit that the SBA Express loan offers over other SBA loans is a quicker decision process. Whereas other SBA loans may require extensive time before approval with a process that can take up to three months, an SBA Express loan allows business owners to get a decision and receive funding in a shorter amount of time. With an accelerated turnaround time for SBA review, borrowers are given a decision within just three days.

When You Should Consider Other Options

Not quite sure if the SBA Express loan is right for you? Not all business owners are able to obtain this funding, but this does not mean that their dreams of owning a business are over. If you do not qualify for an SBA loan, there are other alternative options that you can pursue to get the funding you need for your business.

One of these options is obtaining a business loan or line of credit from alternative online lenders like Kabbage. These institutions can offer you flexible and convenient funding options, and they take into account more than just your credit score. Kabbage uses real-time data from your online business accounts, such as PayPal, Square or your business checking account, to determine credit worthiness. The best part is, the entire process is online. This safe and secure application process is fast and simple, allowing for a quicker application decision so you can get your money faster.

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