SBA Express loan: What it is and how to apply
Key takeaways
- SBA Express and Export Express loans offer loans of $500,000 or less.
- Express loans don’t need SBA review, speeding up the approval process.
- Lender requirements can vary from lender to lender, so you may want to compare multiple lenders before making a decision.
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.
The Express loan program helps to significantly shorten the waiting time. Unlike with other SBA loans, lenders don’t have to get direct SBA approval for Express loans, which can significantly speed up the lending process. 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 type of 7(a) loan with amounts of up to $500,000. Unlike other loans offered through the 7(a) program, Express loans do not require direct SBA approval, which allows lenders to follow their own underwriting process, in exchange for a smaller SBA guarantee amount. This allows Express loans to be processed faster than other SBA loans. They can be funded within a few weeks. Funding can be used for working capital, expansion, equipment and debt refinancing.
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 SBA guarantees and are meant specifically for businesses that export products.
| Loan amounts | Interest rates | Loan terms | Maximum SBA guarantee | Collateral requirement | Repayment terms | Fees | Funding speed | |
|---|---|---|---|---|---|---|---|---|
| SBA Express loan | $500,000 | 10.5% to 14% | Up to 10 years for term loans or lines of credit; 25 years for property purchases or improvements | 50% | Loans up to $50,000 typically do not require collateral, lender sets collateral requirements for loans above $50,000 | Revolving lines of credit for up to 10 years | Optional packaging fee, service fee, late payment fee, prepayment penalties ranging from 1 to 5 percent | Typically 30 to 90 days |
| SBA Export Express loan | $500,000 | 10.5% to 14% | Up to 10 years for term loans, up to 7 years for lines of credit | 90% for loans of $350,000 or less 75% for loans over $350,000 |
Loans up to $50,000 typically do not require collateral, lender sets collateral requirements for loans above $50,000 | Revolving lines of credit for up to 7 years | Optional packaging fee, service fee, late payment fee, prepayment penalties ranging from 1 to 5 percent | Typically 30 to 90 days |
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 streamlined SBA approval time makes it ideal if your business needs faster funding.
Like with 7(a) loans, interest rates can be variable or fixed based on the Prime rate plus a percentage. Rates are currently between 10.50 percent and 14.00 percent. Exact rates vary depending on the amount of the loan and the type of interest rate charged.
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. Like the Express loan, the lender doesn’t need direct SBA approval and can use their usual processes for approving the loan.
SBA Express loan requirements
Because the SBA Express loan program falls under the 7(a) loan program, your business must meet the same minimum requirements to qualify:
- Operate as a for-profit business. Businesses must operate for profit in the U.S. or U.S. territories.
- Business size. The business must be defined as a small business, outlined in the SBA size requirements by industry.
- Applied for other loans. Your business must have already applied for other loans and used other business or personal assets to qualify.
- Have collateral in place for higher loan amounts. The SBA doesn’t require lenders to take collateral for loans of $50,000 or less. For higher loan amounts, lenders can use their usual policies for collateral, but can’t disapprove a loan due to lack of collateral.
- Meet lender-specific requirements: Minimum annual revenue, time in business and credit score may also be required by 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.
- Demonstrate repayment ability: Lenders can use a variety of methods for reviewing the business’ repayment ability, including asking for tax returns and a debt schedule, plus recent profit and loss, cash flow and bank statements.
Business owners with at least a 20 percent stake in the business typically must provide an unconditional personal guarantee, including for SBA express loans. This means you’re personally responsible for the loan repayment if your business can’t repay.
Pros and cons of SBA Express loans
SBA Express and Export Express loans are some of the faster options on the market for SBA loans. Yet they can still be difficult to qualify for and limit how much your business can borrow.
Pros
- Response time. Lenders don’t need the SBA to directly review the loan before approval. They are free to approve the loan using their usual processes, often leading to approvals that take a few weeks or less. This is significantly quicker than the weeks or months it can take to be approved for a standard 7(a) or 504 loan.
- Long loan terms. SBA Express loans offer line of credit terms of seven to 10 years, and term loan terms up to 10 years.
- Variety of lender options. The SBA provides Express loans through 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 can be approved quickly, but if your financing needs exceed $500,000, you’ll have to look elsewhere.
- Down payment required. Your business may need to make a down payment if you are borrowing more than $50,000. The amount and whether or not a down payment is required is up to lender policy.
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, but many small businesses will benefit from loans of $500,000 or less. If you need more funding, you will need to consider a different loan option.
- Check your eligibility. You will meet the SBA’s small business size standards and operate for profit, along with other SBA and lender requirements to qualify for an Express loan. Reach out to the lender to find out their eligibility requirements for these loans.
- 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. Numerous banks, credit unions, online lenders and some non-profit lenders offer SBA loans. You can also contact your local SBA district office for a list of preferred lenders, or use the SBA Lender Match tool can help you find a lender that fits your business.
- Apply and submit documentation. Next, 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.
- Receive a loan decision. You should receive an approval decision from the lender within a few weeks, based on the lender’s usual timeline for processing 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. If an Express loan isn’t the best fit, there are alternative lending options for your business that may be easier to qualify for:
- 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 a less in-depth application process and may offer rewards for frequent use. Most business credit cards simply assess your credit score to determine if you qualify.
- 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 or if you have poor personal credit. You may want to consider a bad credit business loan if your credit score is standing in your way.
- Cash advances. While not exactly loans, options like merchant cash advances and invoice factoring are quick options for business owners. While these loans tend to have lenient eligibility requirements, they often charge high fees and interest rates and should generally be used as a last resort.
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.
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