Small businesses often require quick funding to address short-term cash flow needs or to seize growth opportunities. One option for such businesses is the SBA Express Loan program. In this section, we will discuss the requirements and application process for the SBA Express Loans.
What is an SBA Express Loan?
SBA Express loans are a type of business loan offered by the Small Business Administration’s (SBA) 7(a) loan program. These loans are flexible and can be used for various business purposes, including working capital, equipment purchases, real estate, or acquiring an existing business. Business owners can choose either standard Express loans or Export Express loans, which are reserved for small businesses that export products.
Both standard Express loans and Export Express loans provide loan amounts of up to $500,000. The available repayment terms depend on the type of loan and its purpose. Lines of credit have a seven-year repayment term, while real estate loans can be repaid over 25 years. Other loans have a repayment term of five to ten years. The interest rates vary depending on the lender, borrower qualifications, and the loan size. However, interest rates cannot exceed the prime rate plus 6.5% for loans of $50,000 or less, and the prime rate plus 4.5% for loans over $50,000.
SBA Express loans are popular among small businesses as they offer quick access to funds. The application process is straightforward, and lenders can approve loans within a short time frame. However, it’s important to note that businesses must meet the eligibility requirements and provide complete and accurate documentation to increase their chances of approval.
SBA Express Loan Requirements
The SBA enforces stringent eligibility standards for small business owners seeking Express loan funds. To qualify for an SBA Express loan, a business must meet certain criteria such as
- Being classified as a small business by the SBA
- Operating for profit in the United States or its territories
- Having reasonable owner equity to invest
- Demonstrating efforts to utilize alternative financial resources before applying for assistance through the SBA
Moreover, borrowers must meet individual lender requirements beyond SBA mandates. These may include minimum annual revenue, a specific time in business, and a FICO score minimum of 650, with lenders typically mandating this threshold. Borrowers are also required to provide collateral for standard SBA Express loans exceeding $25,000 as per SBA guidelines.
However, Export Express loan collateral requirements are subject to the lender’s discretion. Meeting eligibility standards is critical to acquiring SBA Express loans and receiving financial assistance.
How to Get an SBA Express Loan
To apply for an SBA Express loan, borrowers need to follow a slightly different process than applying for a business loan. The process involves submitting SBA-specific forms and meeting eligibility requirements. Here are the steps to obtain an SBA Express loan:
- Assess your borrowing requirements. Determine how much money your business requires and for what purpose. Keep in mind that SBA Express loans are limited to a maximum amount of $500,000 and can only be used for specific purposes.
- Confirm eligibility. The SBA imposes specific eligibility requirements for its loan programs, including Express loans and Export Express loans. Ensure that your business meets the eligibility criteria before starting the application process.
- Find an approved lender. SBA Express loans are issued through approved lenders, with a certain percentage of the loan guaranteed by the SBA. Find an SBA-backed financial institution that suits your needs and follow their application process. Check their interest rates and other features before proceeding.
- Complete SBA Form 1919. All Express loan applications require completion of an SBA Form 1919, regardless of the lender. This form requires information about business ownership, how funds will be used, the number of employees, and the SBA loan application history. Submit the form as per the lender’s application process.
- Provide supporting documents. Eligibility and credit decisions for Express and Export Express loans are made by individual lenders. The lender may request projected financial statements, business credit reports, business and personal tax returns, a business plan, and other relevant documents.
- Wait for SBA approval. The SBA typically responds to Express loan applications within 36 hours and Export Express loan applications within 24 hours, which is significantly quicker than other SBA loans that take between five and ten business days for approval. After approval, business owners usually receive their Express loan funds within 30 to 60 days.
Lender credit approval and funding speeds may vary, but once a loan is approved by the SBA, borrowers can expect to receive their funds within a few weeks.
Get Your SBA Express Loan with REIL Capital
We are committed to a buyer’s education and transparency, so you can feel confident that we are working for you throughout the process. If our brokered Express SBA loans or other funding options look desirable to you, contact REIL Capital today to start the process!
