SBA 7(a) Express Loans
These are fast loans backed by the government that offer financing up to $350k.
SBA 7(a) Express Loan Overview
An SBA Express loan is a loan with a fast funding time and maximum amounts up to $350,000. This is because the SBA gives more independence to lenders when it comes to loan approval. It’s important to remember that the SBA is not the one lending money to borrowers. Instead, they guarantee loans made by participating lenders.
If you’ve been in business for more than 2 years and have a credit score of 680 or higher, you may qualify for up to $350K in SBA funding with SmartBiz. Their online application process can be completed in a few minutes. Loans typically fund in under 30 days.
Free Checklist
For Buying a Business
How SBA 7(a) Express Loans Work
The maximum loanable amount that a business can take through SBA 7(a) Express loan program is $350,000. That’s much lower than the traditional SBA 7(a) maximum loan amount of $5,000,000. The interest rate may be negotiated between the lending institution and the borrower. Both fixed and variable interest rates are available, with a maximum rate ranging from 4.5% to 6.5% above the prime rate.
Because there is a flexibility when it comes to the purpose of the loan, SBA Express loan is recommended for small businesses in need of funds for various reasons, such as:
- For additional working capital
- To sustain cash flow
- Pay for operating expenses
- To acquire assets needed by the business
- To buy supplies and inventory
- To purchase furniture and fixtures
- For other business needs
While many believe that an SBA Express loan is the best option if you want to get funded immediately, the processing time still depends on how fast the lending institutions process and approve the SBA loan application. The standard SBA turnaround time is within 36 hours, and the actual funding time is within 45 to 90 days. Again, this may vary from one lender to another.
With SBA Express loan, the SBA trusts the lender’s underwriting and just does a high-level review, rather than an in-depth review of the loan before approving it. This increases the risk for the SBA, thus SBA reduces their exposure through:
- Providing lower maximum loanable amount which is $350,000 only, versus the traditional SBA 7(a)’s maximum loan amount of $5 million
- Providing lower guarantee of 50% of the loan only, compared to the 75% to 90% lender’s SBA guarantee for traditional SBA 7(a)
Lending institutions are not required to take collateral for loans up to $25,000. However, for loans above $25,000 up to $350,000, they are allowed to use their existing collateral policy.
Traditional SBA 7(a) vs SBA Express Loans
| Maximum Loan Amount | ||
| Maximum Interest Rates | ||
| SBA Guarantee | ||
| SBA Review Turnaround Time | ||
| Actual Funding Time |
SBA 7(a) Express Loan Qualifications
Small businesses that are in good standing are eligible for an SBA 7(a) Express loan, specifically if:
- They are in need of a loan not more than $350,000
- They have a satisfactory credit score of 680+ (check your score for free here)
- Their business is profitable
- Their revenue trends are positive
- They have a DSCR (debt-service-coverage-ratio) of 1.1 or higher
SBA Express Loan Costs and Terms
Borrowers may directly negotiate with their chosen lending institution on the interest rate. Either fixed or variable interest rates are available, and they are tied to the prime rate, LIBOR, or the optional peg rate, but must not exceed the SBA maximums. Lenders are allowed to charge up to 6.5% on top of the base rate for loans of $50,000 or less, and up to 4.5% over the base rate for loans above $50,000.
The term for SBA 7(a) Express loans may vary depending on the borrower’s capacity to pay and on the purpose of the loan. Below is a list of maximum terms based on purpose:
- Line of Credit: 7 years
- Real Estate: 25 years
- Other purposes: 5 to 10 years
Bottom Line
Financing is essential to the life of the business. Finding the kind of financing option that would best suit your needs and benefit your business in many aspects is equally important. It is necessary to know your options and understand everything first before making a decision.
Have you been in the business for more than 2 years and have a credit score of 680 or more? SmartBiz can provide you with SBA loan up to $350,000, and you typically can get funded within 30 days. Their online application process is simple and can be completed in a few minutes.
The Details:
Maximum Loan Amount
$350k
Typical Loan Term
5 - 25 years
Typical Interest Rates
4.5% - 6.5% plus prime
Speed
45 -90 days
Down Payment?
Needed for SBA loans
Collateral?
Needed for SBA loans
Personal Guarantee?
Needed for SBA loans
Have a question?
Pros
Flexible loan purpose: funds may be used as deemed necessary for the business
Reduced SBA eligibility documentation requirements
For loans $25,000 and lower, collateral may not be necessary
Accelerated processing
Cons
Limited (and lower) maximum loan amount which is $350,000 only
Higher interest rates compared to the traditional SBA 7(a)
The turnaround time of loan processing and approval is quite dependent on lender efficiency, and this may take slower than expected
How to Apply
Answer Simple Questions
Browse Your Loan Options
Get Funded in Record Time
Additional Resources
Success Stories
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