Qualifying for the SBA Express Loan Program

There are times when a small business looks to raise capital quickly with a fast business loan, one option is the SBA Express Loan, which provides up to $350,000.00 to businesses that need a more rapid turnaround time. The lenders have a much more broad discretion in which to provide funds, meaning that they can approve the loan in-house, and not wait for the SBA approval.

Loan Requirements

The SBA requirements for the express loan are the same as those for the 7(a) loan. Those qualifications include:

  • retail, professional, manufacturers, wholesale or distribution services, or other service industry related businesses with revenues under $25 million
  • SBA express loans may be used for purchasing land or buildings, equipment, machinery or supplies; for long-term or short-term working capital; for refinancing; or for purchase of an existing business. All related expenses must be for the business and not personal.
  • american businesses that must be for profit
  • the business cannot already have internal resources to provide the financing
  • the business must demonstrate the ability to repay the loan

Additional Qualifications

  • Credit review of the business and the principals or partners
  • The experience and business history of the principals or partners
  • Available collateral as deemed necessary by the lender

Terms and Conditions

Because the lender has so much discretion in lending the funds for the express loan, the terms can vary from lender to lender. The SBA will only back 50% of the loan principal, when it is typically 75%. Other conditions:

  • the interest rate is held to 4.5% above prime for loans over $50,000. For loans below this amount the rate is 6.5%.
  • the approval rests with the qualified lender
  • lenders are given the right to use their existing collateral policies for loans between $25,000 and $150,000.  Once this is exceeded, the SBA's collateral policies must be followed.  Business and personal assets may be required depending on the lender.
  • while terms can vary, a three year revolving line of credit is popular, then converting to a 4-year or 7-year term loan

The SBA express loan program is beneficial with its lower interest rates and faster turnaround time since the lender can use their own forms. As with any commercial loan, the small business must provide a loan proposal or business plan. This plan includes financial statements and tax returns from three prior years, and must be in good credit standing.