Q: What Is an SBA Express Loan and How Do I Apply?

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An Express Loan is part of the Small Business Administration (SBA) ‘s 7(a) loan program. SBA 7(a) loans are the agency’s main method of financially supporting small businesses. The SBA is not a financial institution and cannot lend money to businesses directly, so the agency instead connects small businesses to approved third-party lenders and guarantees the loans, or backs them in case the borrowers are unable to repay them.

The SBA Express Loan is one of the options under the 7(a) program, which offers an expedited approval time of just 36 hours. However, the shorter timeline comes hand-in-hand with higher risk, and the SBA only guarantees 50% of the loaned amount.

But especially for businesses that have tried and failed to receive funding elsewhere, the SBA Express Loan is a helpful option to consider.

Loan maximums

Small businesses can borrow up to $350,000.

What can SBA Express Loans be used for?

Unlike a disaster loan, the 7(a) loan program is not just available for small businesses during emergencies. These loans can be used whenever there’s a need for additional funds—so long as they’re used for business purposes. Express Loans in particular can be used for the following:

  • Providing long-term or short-term working capital
  • Accounts payable, purchasing inventory, or other operational expenses 
  • Seasonal financing, contract performance, or export
  • Purchasing real estate, equipment, furniture, machinery, supplies, and materials
  • Construction and/or renovation costs
  • Establishing, acquiring, or expanding a business
  • Refinancing business debt (so long as the lender and the SBA will not sustain a loss)

Express Loans CANNOT be used for:

  • Reimbursing an owner for any personal investments toward the business
  • Repaying delinquent withholding taxes
  • Affecting any change that will not have a positive effect on the business
  • Any purpose the SBA does not deem a “sound business purpose”

Who is eligible?

Businesses applying for an SBA Express Loan must meet the following criteria:

  • Must operate for profit
  • Must operate within the USA
  • Have been in operation for at least two years
  • Qualify as a small business by SBA standards (in most cases, 500 employees or fewer)
  • Must demonstrate a need for financing
  • Must have already financed the business through alternative means
  • Must show that funds will be used for sound business purposes
  • Cannot be delinquent on previous debts to the government

Several businesses are also ineligible for Express Loan financing, including but not limited to:

  • Financial institutions that engage in lending
  • Life insurance companies
  • Consumer marketing cooperatives
  • Speculative businesses 
  • Firms engaged in pyramid sale distribution plans
  • Businesses that make more than one-third of their gross annual revenue from legal gambling activities
  • Businesses that promote or partake in any illegal activities

Express Loans are also unavailable if the business can reasonably access financing through other means, like, for example, if a business owner is able to use personal funds for business needs without experiencing financial hardship.

Terms and conditions

As stated above, to allow for the 36-hour turnaround time, the SBA will only guarantee 50% of the loan amount, which can go up to $350,000.

Due to the increased risk of the Express Loan, the lender owns much of the decision-making around the loan terms, including eligibility, interest rate, and credit decisions. While lenders and borrowers can negotiate the interest rate, it may not exceed the SBA maximum. The current maximum interest rate ranges from 7.25% to 9.75%.

If you’re approved for an Express Loan, you’ll receive your funds within 90 days, and you’ll have to pay a guaranty fee to the SBA within this timeframe. The fee is a percentage of the amount guaranteed by the SBA, or 3% on the guaranteed portion of loan amounts between $150,001 and $350,000.

How do I apply for an SBA Express Loan?

Use the SBA’s 7(a) lender search tool to connect with a lender that provides 7(a) loans. From there, the application process is heavily up to the lenders’ discretion, but it typically requires:

  • Borrower application forms (including SBA Form 1919)
  • Your plans for the loan funds
  • Personal history statement (if applicant has a criminal history)
  • Agreement of compliance (if you plan to use the funds for construction)
  • A profit and loss statement
  • Financial projections
  • A list of owners and affiliations
  • All business licenses and certifications
  • Any and all previous loan applications
  • Signed tax return documentation for the owner(s) and the business dating back at least 3 years
  • Resumes of all owners with more than 20% ownership of the business
  • Any business-related leases

Prepare to get your application started with the SBA’s Express Loan Checklist.

Other SBA 7(a) loans

In addition to the Express Loan, you might consider the standard 7(a) loan, which offers up to $5 million for borrowers. The SBA guarantees these loans at 85% up to $150,000 and at 75% for loans greater than $150,000.

The 7(a) Small Loan grants borrowers up to $350,000 like the Express Loan, but for these, the SBA offers the same guarantee terms as for a standard 7(a) loan.

Unlike the SBA Express Loan, both the standard and small 7(a) loans have longer application processes and are typically processed by the SBA in five to 10 business days.

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