What Is An SBA Express Loan?

An SBA express loan is aimed at assisting a small business owner in getting financial assistance faster than the conventional loan programs provided or backed by the US Small Business Administration. This loan facility is another way for borrowers to get quick loans via more streamlined application and documentation processes. Finally, the main reason why this loan facility is called express is due to its 36-hour turnaround time.

SBA express loans are offered through banks and lenders. Since the SBA has given the lenders the freedom to use their own forms and policies with regard to endorsing loans to the agency, the processing time for such loans is significantly lessened.

Who Is Eligible for an SBA Express Loan?

Anybody who is within the age of maturity can apply for this type of loan. However, if you intend to take advantage of this debt facility, you have to show concrete plans on how you will use the proceeds. It is important that you show the lender that you will use the proceeds for starting, expanding or boosting your small business.

The requirements of the loan are similar to typical commercial business loans. The most important thing that you need to prove, however, is that you have the capability to repay your loan on time based on the profits and cash flow of your business. Also, having a good credit background is a plus. Collateral is not really needed to back such a loan, provided that the amount is $25,000 or below. Anything more than $25,000 should be secured. The maximum amount that can be loaned is $350,000.

Interest Rate of an SBA Express Loan

The borrowers can try to bargain for lower interest rates because the lender is the one that will determine the rate applicable to the loan. However, the SBA has ruled that the maximum interest that lenders can charge is 4.5% for loans above $50,000 and 6.5% for loans that are $50,000 or below.

Advantages of This Loan

The processing time for an SBA loan is fast. Furthermore, people who are unable to obtain traditional credit lines have a chance to secure credit under this debt facility.

Disadvantages of this Loan

One of the major disadvantages of this type of loan is the possibility of higher interest rates. Since the lenders are the ones that are deciding, they might charge higher interest rates for express loans backed by the SBA compared to other types of private loan facilities in their portfolio. Also, express loan requirements depend a lot on the lender. So, one loan provider might deny your application while another might approve it.