Small Business Administration (SBA) loans are the Rolls Royce of business financing. They offer the best rates you can get for a business loan. They also get you the longest repayment terms you’ll find. There is little to hate about SBA loans. The only real downside is how long they take to get. But if you’re in a rush, you can also consider getting an SBA express loan.
What Is An SBA Express Loan?
There are few differences between an SBA loan and an SBA express loan. The popular SBA 7(a) loan is one of the most prized business loan products in the US. The only problem is it normally takes several months to get one. So, the SBA launched the Express program for their SBA 7(a) loans.
For up-to-date interest rates, please visit our SBA loan rates page.
SBA express loans a sped-up version of the popular SBA 7(a) loan. But the two are not the same.
An SBA express loan falls under the Federal US government’s SBA Loan Guarantee Program. They stand apart from SBA 7(a) loans when it comes to speed. Unlike an SBA 7(a) loan, an SBA express loan will be approved or rejected within just 36 hours. If your SBA express loan is approved, the funds will be available to you within 90 days.
This process takes longer than most alternative loans. But for the value you get from it, an SBA express loan is blissful to apply for. There is no comparison with SBA 7(a) loans when it comes to speed and convenience.
SBA Express Loan Requirements
SBA express loans have stringent requirements. On top of all the regular business loan requirements, you will need:
- To have all operations engaged inside the US
- Proof of your need for financing
- Proof that you already attempted to find business financing elsewhere
- A business that’s at least 2 years old
- To qualify as a small business according to SBA size standards
- A history free of delinquencies on any previous debts to the government
There are also restrictions on the kinds of companies that can qualify for an SBA express loan. According to the SBA, the following businesses are ineligible:
- Financial businesses that engage in lending
- Life insurance companies
- Consumer and marketing cooperatives
- Speculative businesses
- Businesses that have a focus on political interests and/or lobbying
- Businesses involved in pyramid sale distribution plans
- Businesses that primarily deal in the teaching of religion
- Businesses that can attribute over a third of their gross annual revenue to legal gambling activities
- Businesses that promote or partake in any illegal activities
- Businesses under the ownership of developers or landlords with no active role regarding assets acquired or improved by the loan proceeds
- Any business or club that limits its number of patrons or members for reasons not related to capacity
- Government-owned businesses
- Loan packagers that deal with SBA loan products
- Businesses that present or profit from (whether directly or indirectly) acts of a sexual nature
- Any business where the CDC or lender (including any and all associates) owns an equity interest
Lastly, the personal requirements for an SBA express loan are:
- A credit score of 600 or higher
- A debt service coverage ratio (DSCR) of 1:1 or higher
Where To Find An SBA Express Loan
You can get an SBA express loan from any SBA-backed lender that offers them. Check out our article on SBA lenders.
The Application Process
Exact application processes vary by lender. But every lender you go to will have a few requirements in common.
In addition to all the standard business loan paperwork, you will need to fill out Form 1919. This is an extra requirement demanded by the SBA. Form 1919 will require you to disclose any previous dealings with the SBA, what you plan to do with your funds, and some information about your business.
Once you submit your SBA express loan application, you will receive your approval decision within 36 hours. This 36-hour rule is strict. But the SBA is far less stringent about how long a lender can take to review your application and send you your funds. While this may sound frustrating, most online lenders that give SBA express loans are quite fast. They have online application processes and will typically send your funds a few days after the SBA approves your loan.
Guarantees And Repayment
Like all SBA loans, SBA express loans are partially guaranteed by the SBA. For SBA express loans, up to 50% of the loan’s sum will be guaranteed.
SBA express loans will either be installment loans or revolving lines of credit. Repayment terms will vary based on the type and purpose of your loan:
- Line of credit: 7 years
- Equipment and machinery purchases or repairs: 10 years
- Inventory and working capital: 10 years
- Commercial real estate: 25 years