SBA Express Loans: What They Are & How to Apply

A Small Business Administration (SBA) Express loan provides up to $350,000 in financing and is ideal for businesses seeking a smaller amount of working capital or equipment financing more quickly as compared to an SBA 7(a) loan. SBA Express loans feature interest rates of 4.5% to 6.5% above the prime rate and typically have a 10-year term. They also carry fewer documentation requirements and generally have faster approval times than 7(a) loans, taking between 30 and 90 days to fund.

If you’re planning to apply for an SBA loan, consider using South End Capital. South End Capital offers SBA loans, and it can approve loans for business owners with credit scores as low as 650, with funding happening in a matter of weeks. Getting in contact with a loan officer is an easy process that requires only a few pieces of information.

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How to Apply for an SBA Express Loan

SBA Express loans can be found at traditional banks as well as other types of lenders. Due to the large number of potential lenders out there, it can be difficult to know which one to choose. If you aren’t sure where to start, read our article on the top SBA lenders. Many of these lenders offer a full suite of SBA loan products, including SBA Express loans.

The loan requirements for an SBA Express loan are similar to the requirements of the SBA 7(a) loan program. While your lender has the flexibility of choosing the factors it uses to determine if your business is creditworthy, the SBA will certainly consider your credit score and ability to repay. The minimum SBA Express loan requirements you’ll need to meet are:

• Credit score: At least 680
• Repayment ability: Debt service coverage ratio (DSCR) of 1.25 or higher
• Revenue trends and profitability: Positive revenue trends, and your business must be profitable
• Collateral: Generally not required for loans up to $25,000—personal or business collateral sufficient to cover 100% of the loan amount may be required by your lender for larger loans

Our step-by-step guide on how to apply for an SBA loan will help you navigate your way through the process. Understanding what documents are required by SBA Express lenders and preparing them ahead of time won’t only speed up approval times but can also increase your approval chances. To make the application process easier, we’ve developed a free SBA loan documentation checklist for you to use.

Here’s a list of documentation you may need during the SBA Express loan application process:

Additionally, all owners with at least a 20% stake in the company need to include the following:

• SBA Form 1919 (Borrower Information Form)
• SBA Form 912 (Statement of Personal History)
• SBA Form 413 (Personal Financial Statement)
• Last three years of personal tax returns

If you plan on using the SBA funds to purchase an existing business, then you need to provide the following documents for the business you want to acquire:

• Current balance sheet
• Current P&L statement
• The last three years of the business’ income tax returns
• A bill of sale or the proposed terms of sale
• A list of inventory, machinery, furniture, fixtures, and other equipment to be included in the sale

Lender underwriting times vary by lender. However, submitting a complete loan package and promptly responding to lender requests for additional information will help nudge the approval timeline along. Approval from a lender can happen in as soon as 30 days but can take as long as 90 days if there are delays with underwriting. Before applying, ask your lender how long their approval times average.

SBA Express Loan Terms & Rates

The SBA Express loan features a faster turnaround time for SBA review, typically within 36 hours of your lender’s preliminary approval. This financing program is flexible and can be used for working capital term loans, a line of credit, or commercial real estate term loans. As with all SBA loans, collateral might be required by your lender. Lenders aren’t required to take collateral for loans up to $25,000, but they may use their existing collateral policy for loans of $25,000 to the program’s maximum of $350,000.

SBA Express Loan Terms

SBA Express loan terms are designed to match the expected life of the collateral backing the loan. The maximum SBA Express loan terms are:

• Lines of credit: Up to 10 years—advances allowed for up to five years, then the line of credit is termed out over another five years
• Inventory or working capital term loans: Up to 10 years
• Equipment, fixtures, or furniture term loans: Greater of 10 years or the useful life of the collateral, not to exceed 25 years
• Leasehold improvement term loans: Up to 10 years
• Real estate term loans: Up to 25 years

SBA Express Loan Interest Rates

The maximum interest rates for SBA Express loans as of November 2021 are:

• Loans up to $50,000: Prime + 6.5% = 9.75%
• Loans over $50,000: Prime + 4.5% = 7.75%

For variable rate SBA Express loans, your lender can choose any base rate to calculate your interest rate provided it’s similar to the rates your lender charges for other non-SBA guaranteed loans of a similar size. Regardless of how the rate is set, the maximum interest rate you’re charged by your lender still cannot exceed Prime plus 4.5% to 6.5%.

SBA Export Express Loans

The SBA Export Express loan program provides financing of up to $500,000 for businesses to begin or expand their export business. One other difference with the Export Express program compared to the standard SBA Express program is that Export Express loans are guaranteed at 90% to $350,000 and 75% for loans above that amount.

SBA Export Express lenders use their own credit decision process and loan documentation, and the SBA provides an expedited eligibility review within 24 hours. The funds must be used to enhance the business’s ability to export goods and services. As with most types of export financing, collateral requirements are based on the policies and procedures established by the lender for its non-SBA-guaranteed loans.

SBA Export Express Loan Terms

The amount of time you’ll get to repay an SBA Export Express loan is based on the type of loan—line of credit versus term loan—and the type of collateral. The maximum loan terms you can expect for an SBA Export Express loan are:

• Lines of credit: Up to seven years
• Inventory or working capital term loans: Up to 10 years
• Equipment, fixtures, or furniture term loans: Greater of 10 years or the useful life of the asset, not to exceed 25 years
• Leasehold improvement term loans: Up to 10 years
• Real estate term loans: Up to 25 years

Interest rates on the SBA Export Express loan program are capped similarly to its sibling program. Loans of up to $50,000 cannot exceed Prime plus 6.5% and loans over $50,000 cannot exceed Prime plus 4.5%.

Differences Between SBA Express Loans & SBA 7(a) Loans

While there are many different types of SBA loans, most people first think of an SBA 7(a) loan because it’s the most commonly used SBA loan program. SBA Express loans are built on the same program framework as the 7(a) program but are designed for funding of up to $350,000. Another key point is that your lender has more flexibility in underwriting and in what documentation is required.

Key differences between an SBA Express loan and a traditional SBA 7(a) loan include:

The main reason borrowers choose an SBA Express loan over an SBA 7(a) loan (despite the higher interest rates) is that lenders promise quicker funding times. Most business owners are willing to pay a premium for speed, especially when they need cash to grow their business.

South End Capital can typically get SBA loans funded in just a matter of weeks, as they have a dedicated SBA team who’ll work with you through the process. If you’ve been in business for two or more years and need fast SBA loans up to $350,000, you can begin the process to get a loan online with just a few pieces of information.

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SBA Express Loan Alternatives

There are times when you need to get funds more quickly than the timeframe that’s typical for an SBA Express loan. There are fast business loan options that can provide you with necessary funds until you can get a refinance or consolidation loan approved and funded through the SBA. The best fast business loans provide you with funds in less than one week. Note that with many of these options, interest rates will be higher than with the SBA Express loan.

Some other alternatives to SBA Express loans include:

• Small business line of credit: With some small business lines of credit, you’ll need to provide less documentation than with an SBA loan, and applications can be completed in minutes. Qualifying is also easier than with an SBA Express loan, as borrowers with lower credit scores might be approved.
• Unsecured business loan: An unsecured business loan from an online lender is another fast SBA loan alternative. Collateral isn’t required, which means the application and approval process will be faster. Applications can be completed in minutes and funding can happen in as soon as three business days.
• Invoice financing: With some of the best accounts receivable financing companies and invoice factoring companies, applying online takes minutes, and you can get funded in a matter of days. Plus, with many invoice financing providers, credit score is often not a consideration for approval.

Bottom Line

SBA Express loans can provide potentially faster approval times but have higher interest rates. SBA Express loan terms also feature shorter repayment periods than traditional 7(a) loans. However, the Express loan program can provide funding in as little as 30 days if you partner with a lender with experience in the program and if the borrower is fully prepared at application time.