SBA Express loan: Requirements and application
The Small Business Administration (SBA) offers loan programs to fund small businesses nationwide. They often have lower rates than many alternative lenders and even some banks, but they can take weeks or months to fund.
However, the Express loan program helps to shorten some of the waiting time. The funding approval timeline offered by the SBA is under 36 hours. If your business needs a fast loan but wants to avoid the higher cost of working with an online or alternative lender, the Express loan program is worth considering.
What is an SBA Express loan?
An SBA Express loan is a working capital loan of $500,000 designed for small businesses. It is part of the 7(a) loan program. But unlike other loans offered through the 7(a) program, Express loans are fast business loans that can be processed within 36 hours.
The amount you can borrow is limited, but you can use your funding for a variety of expenses, including working capital, expansion, equipment and debt refinancing. The amount the SBA guarantees may also be lower than on its normal 7(a) loans, but for businesses that only need a small amount, they can be a handy way to get quick funding.
Types of SBA Express loans
Both SBA Express loans and SBA Export Express loans fall under the larger 7(a) loan program. They allow businesses to borrow the same amounts for similar rates and terms — but Export Express loans have larger guarantees and are meant specifically for businesses that export products.
Loan amounts | Interest rates | Loan terms | Maximum SBA guarantee | |
|---|---|---|---|---|
SBA Express loan | $500,000 | Prime rate plus 2.25% to 4.75% | Up to 10 years for term loans, up to 7 years for lines of credit | 50% |
SBA Export Express loan | $500,000 | Prime rate plus 2.25% to 4.75% | Up to 10 years for term loans, up to 7 years for lines of credit |
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SBA Express loan
An SBA Express loan is similar to a standard 7(a) loan. While your business is limited to just $500,000 rather than the usual $5 million, the 36-hour turnaround time makes it ideal if your business needs fast funding. And like 7(a) loans, interest rates can be variable or fixed based on the Prime rate plus a percentage — currently between 2.25 percent to 4.75 percent.
SBA Export Express loan
The Export Express loan is slightly different. They are only available for businesses that export products outside the U.S. So, while your business will have access to similar terms as an Express loan or 7(a) loan, it must meet the additional requirement of being involved in exports. However, it does have a slightly faster approval timeline of just 24 hours, making it the quickest loan available through the SBA.
SBA Express loan requirements
Since the SBA Express loan program falls under the 7(a) loan program, your business must meet the same minimum requirements to qualify.
For-profit. Businesses must operate for profit in the U.S. or U.S. territories.
Owner equity. Each business owner must have invested significant personal equity and assets into the business.
Other funding. Your business must have already applied for other loans and used other business or personal assets to qualify.
Other requirements — like minimum annual revenue, time in business and credit score — will depend on the lender you work with. In most cases, you will need to provide proof of steady cash flow and have a personal or business credit score in the good to excellent range.
Depending on the loan amount and lender terms, your business may also need to provide collateral.
Pros and cons of SBA Express loans
While SBA Express and Export Express loans are one of the faster options on the market, they are still difficult to qualify for and limit how much your business can borrow.
Pros
Response time. The SBA will respond to Export Express loans within 24 hours and Express loans within 36 hours. This is significantly quicker than the weeks- or months-long waiting period for standard 7(a) or 504 loans.
Lines and loans available. Businesses can choose between a line of credit with a 7-year maturity or a term loan that lasts five to 10 years.
Variety of lender options. The SBA certifies a variety of lenders, including large banks and online lenders, that work in the alternative finance space.
Cons
Smaller loan amounts. Express and Export Express loans have a quick response time but limit how much your business can borrow to $500,000.
Down payment required. Like other loans in the SBA 7(a) program, your business will need to make a down payment between 10 percent to 30 percent of the loan amount.
Requirements set by the lender. The SBA has a few basic requirements businesses will need to meet, but most eligibility criteria are set by the lender, not the SBA.
How to apply for an SBA Express loan
The application process for SBA Express loans is similar to any other business loan. You will need to determine your business’s funding needs, check your eligibility and compare lenders before applying.
Determine your business’s needs. Express loans are significantly smaller than other SBA loans, limiting you to $500,000. If you need more funding, you will need to consider a different loan option.
Check your eligibility. You will need to have invested your own money and assets into the business, along with meeting other SBA and lender requirements, to qualify for an Express loan.
Fill out SBA Form 1919. In addition to other documentation, you will need to complete Form 1919. This form requests information about your business and personal information about each owner.
Compare at least three lenders. Because of the wide variety of lenders that work with the SBA, you should compare three or more lenders before you apply. The SBA Lender Match tool can help you find a lender that fits your business.
Apply and submit documentation. Once you find a lender and have completed Form 1919, you will need to apply for the loan and submit supporting documents that show your business’s finances, assets and how it will utilize the funding.
The SBA has a total turnaround time of 24 to 36 hours, depending on what type of Express loan you apply for. You should receive an approval decision from the SBA within this period. The actual funding timeline after your lender approves your application may take a few weeks, although this is still much quicker than standard SBA loans.
Alternatives to SBA Express loans
The SBA requires business owners to exhaust other forms of financing before they can qualify for any 7(a) loan, including Express and Export Express loans. There are alternative lending options for your business that may be easier to qualify for, including:
Fast business loans. A fast business loan can take a variety of shapes. Some are term loans, while others are lines of credit. Whichever you go with, you can expect a quick application process and a decision within a few days in most cases.
Business credit cards. For smaller everyday expenses, you may want to consider a business credit card. These offer more flexible financing options, a less strenuous application process and may offer rewards for frequent use.
Bad credit business loans. It can be more difficult to qualify for an SBA loan — especially if your business doesn’t have its own established score. So you may want to consider a bad credit business loan if you have a lower personal credit score.
Short-term business financing. While not exactly loans, options like merchant cash advances and invoice factoring are quick options for business owners. However, they will come at a higher cost than more traditional financing.
The bottom line
SBA Express and Export Express loans are ideal for small businesses needing fast funding. While they can be more difficult to qualify for than other fast business loans, their competitive rates and government-backed status make them a safe option for your business.
Frequently asked questions about SBA Express loans
How easy is it to get an SBA Express loan?
It can be easier to qualify for an SBA Express loan as an established business with strong revenue and good credit. Actually receiving a loan may be more difficult — SBA loans are extremely competitive, and only 40,000 to 50,000 businesses are approved for 7(a) or Express loan funding each year.
What is the easiest SBA loan to get approved for?
Loans under the 7(a) program have a higher acceptance rate. And since most 7(a) loans are for $50,000 or less, it may be easier to get approved for a small amount with an Express loan. However, you will still need to meet the minimum criteria to qualify and be approved.
What is the minimum credit score for an SBA Express loan?
The SBA does not have a set minimum credit score for business owners. However, the lender you work with might. In many cases, you will be required to have good to excellent credit — a FICO score of 670 or higher.
