An SBA Express Loan is guaranteed by the Small Business Administration for up to $350k. They carry fewer documentation requirements than a traditional 7a loan and can fund quicker. These loans carry a maximum interest rate of 4.5% – 6.5% above Prime and typically have a 10 year repayment period.
Similar to Express loans, SmartBiz provides fast, traditional SBA 7(a) funding up to $350k. They can work with businesses that have been operating for 2+ years and have a credit score above 680. The entire application can be completed online in just a few minutes and they can have you funded in as little as 2 weeks.
Types of SBA Express Loans
There are two types of SBA Express loans, one for businesses who export goods and another for all other business. Lenders can approve a loan or line of credit up to $350k with the main SBA Express program, while the SBA Export Express loan program can help businesses get approved who primarily export goods for up to $500k.
The 2 types of SBA Express loans are:
1. SBA Express Loans
The SBA Express features an accelerated turnaround time for SBA review but a smaller maximum loan amount. The SBA will respond to your application within 36 hours but the maximum you can borrow is $350k. This financing program is flexible and can be used for working capital loans, a line of credit, or commercial real estate loans.
Who It’s Right For
The SBA Express can be a good option for those who need working capital loans under $350k. The simplified application process and quick turnaround time make this an appealing alternative to the standard 7a loan.
Maximum Loan Amount
- 5 – 10 Years for working capital
- 7 years for a line of credit
- 25 years for commercial real estate loans.
SBA Approval Time to Lender
When a lender submits a loan application to the SBA for approval, they’ll typically respond within 36 hours.
Actual Funding Time
30 – 90 days
Lenders and borrowers negotiate the interest rate. Rates can be fixed or variable and are tied to base rates, which include the prime rate, LIBOR, or the optional peg rate. These rates may not exceed SBA maximums, which are up to 6.5% over the base rate for loans of $50k or less, and up to 4.5% over the base rate for loans over $50k+.
Collateral might be required by your lender. Lenders are not required to take collateral for loans up to $25k, but they may use their existing collateral policy for loans of $25k – $350k.
If you’re looking for up to $350K in SBA funding, we recommend applying with SmartBiz. If you’ve been in business for 2+ years, have a credit score above 680, and are profitable, you may qualify. Get pre-qualified in under 5 minutes and funded within 30 days.
2. Export Express Loans
The SBA Export Express Program is a streamlined method to get SBA-backed financing for loans and lines of credit up to $500k. 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.
Who It’s Right For
The Export Express is a good option for businesses that need $500k or less in loans to begin or expand their export business. The simplified application process and the quick approval turnaround time make this loan more appealing than the SBA Express for export businesses.
Maximum Loan Amount
- Working capital loans: 5 – 10 years
- Lines of credit: 7 years
- Real estate loans: 25 years
SBA Approval Time to Lender
When a lender submits a loan application to the SBA for approval, they’ll typically respond within 24 hours.
Actual Funding Time
30 – 90 days
Lenders and borrowers can negotiate the interest rate. Rates can be fixed or variable and are tied to a base rate, which can be either the prime rate, LIBOR, or the optional peg rate. These rates may not exceed SBA maximums which are up to 6.5% over the base rate for loans of $50k or less, and up to 4.5% over for loans over $50k.
Collateral is based on the policies and procedures established by the lender for its non-SBA-guaranteed loans.
SBA Express Loan Minimum Qualification Requirements
The qualification requirements for an SBA Express loan are similar to the 7a loan program, but in the end, your lender will determine what you must satisfy to get approved. In general, to qualify for an SBA Express loan you’ll need:
- Credit score above 680 (check your credit score for free)
- Debt-service-coverage-ratio (DSCR) of 1.1 or higher
- Positive revenue trends
- Business is profitable
Where to Get an SBA Express Loan
SBA Express loans can be found at traditional banks. Due to the large number of potential lenders out there, it can be difficult to know which one to go with. If you’re not sure where to start you can read our article on the best 100 SBA lenders. Many of these lenders offer an Express loan that you can apply for.
For those small businesses looking to borrow up to $350K quickly, we recommend working with SmartBiz on a traditional SBA 7a loan. SmartBiz’s online application process can prequalify you online in just a few minutes, and you can be funded in as quick as 30 days. This is faster than many SBA lenders lending through the Express program.
Differences Between SBA Express Loans and SBA 7a Loans
While there are many different types of SBA loans, most people first think of SBA 7a loans because it’s the most commonly used SBA loan program. SBA Express loans are built on the same program framework as the 7a program but they’re made for lower funding amounts up to $350k.
SBA Express loans have a smaller limit and a higher maximum interest rate than 7a loans, but they require less paperwork and can potentially fund faster. While similar, SBA 7a Express Loans differ from traditional 7a loans in distinct ways.
SBA Express Loans vs SBA 7a Loans
|Maximum Loan Amount|
|Maximum Interest Rates|
|Lender’s SBA Guarantee|
|SBA Review Time|
Not required prior to closing for PLP lenders
Less than 30 days with SmartBiz
The 4 differences between an SBA Express Loan and a traditional 7(a) loan includes:
1. Lower Maximum Loan Amounts
An SBA 7a loan has a maximum loan size of $5MM and an SBA Express Loan only lends up to $350k.
2. Higher Maximum Interest Rates
SBA 7a Loans carry a maximum interest rate of Prime + 2.75%, but an SBA Express loan has a maximum interest rate of Prime + 4.5 – 6.5%.
3. Lower SBA Guarantees For the Lender
The Small Business Administration guarantees up to 85% of SBA 7a loans but only 50% of SBA Express loans. The difference likely won’t matter to most lenders because of the low loan amounts associated with the SBA Express program.
4. Better Funding Speed
SBA Express loans can have quicker funding times than 7a loans in certain situations because the SBA gives more independence to the lender when it comes to the loan approval process. Essentially, the SBA is agreeing to trust the lender’s underwriting and just do a high-level review of the loan before approving it, rather than an in-depth review.
The main reason borrowers choose an Express loan over a 7a loan despite the larger 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.
4 Things That Affect SBA Express Loan Funding Time
Slow SBA funding times have been a common complaint since the loan guarantee program began. With a name like “SBA Express Loan,” it certainly sounds like it would be a way to get quicker funding, but that can be misleading. Since the SBA loan still must go through the approval process of a traditional lender, even the Express loan can be slower than you think.
The time it takes to get SBA funding is primarily dependant on 4 things:
1. Lender Efficiency During Underwriting
The biggest factor that affects the funding speed for an SBA Express Loan is typically lender efficiency. The lender, not the SBA, controls the vast majority of the application and underwriting processes and ultimately decides when to move forward with a loan approval. This means that many of the issues around funding time on SBA loans are the result of inefficient lending partners.
Many lenders have antiquated, inefficient SBA application processes. They typically require you to go into an office, talk with a number of bank employees and hope that you finally get passed to a loan officer that’s familiar with SBA loans. After all of that, the loan officer will probably just hand you some application paperwork. Keep in mind, you probably have to do all this on your lender’s traditional “banking hours” schedule of 9-5 Monday – Friday.
After the application has been prequalified, they’ll request a huge amount of information from you, which you might have to physically bring into them for review. Typically, they’ll only review things once everything on their list has been received. This is a highly inefficient process that slows down many SBA loan applications, regardless of whether they’re SBA Express loans or SBA 7a loans.
Only after the lender has a complete loan package from you and has approved your loan internally will they seek SBA approval. Express loans get approval notice within 36 hours, or within 24 hours for Export Express loans. When it comes down to it, the antiquated application process at traditional lenders is what slows down SBA funding times the most, not the SBA’s approval time.
That’s why a partner like SmartBiz can be so important to get funded quickly. Their 5-minute online pre-qualification lets you know whether you’re a good fit. As an experienced SBA lender, they’ll only request the documents they need to complete your underwriting which means no chasing down unnecessary documents before your application really gets reviewed.
2. Borrower Preparedness
Many borrowers slow down their own loan process because they’re not ready for each step of the way. While there is a lot a lender can do to speed up the SBA funding process, they have limits if a borrower isn’t on top of things. Even the most efficient SBA lenders can only work as fast as their borrowers allow them to.
Understanding what documentation will be requested by your SBA lender, and preparing it ahead of time, will not only increase the speed of funding but can also increase your approval chances.
Here is a list of documentation you can expect to need during the SBA Express loan process:
- SBA Loan Application
- Plans for Loan Proceeds
- Personal Financial Statement
- Statement of Personal History
- P&L Statement
- Financial Projections
- List of Ownership and Affiliations
- All Business Licenses or Certificates
- Loan Application History
- Last 3 Years of Signed Personal and Business Tax Returns
- Personal Resumes (owners with 20%+ stake in the company)
- History and Overview of the Business
- All Business Leases
In addition, if you plan on using the SBA funds to purchase an existing business then you need to prepare to provide the following documents for the business you want to acquire:
- Current balance sheet
- Current profit and loss statement
- The last 2 years of the business’s income tax returns
- A Bill of Sale, or the proposed terms of sale
- List of the total asking price that includes a schedule of inventory, machinery, furniture, fixtures, and other equipment.
Additional documentation may be required when buying or renovating a commercial property.
If the application process seems complicated, you’re not alone. You can follow our step by step guide on how to apply for an SBA loan to navigate your way through the process.
3. The SBA Doesn’t Make the Final Lending Decision
In most cases, the SBA doesn’t actually lend money to small businesses. Instead, they make it less risky for lenders to make small business loans by guaranteeing a certain percentage of a loan, as long as those loans conform to strict SBA standards. So the “SBA approval” is the SBA’s promise to the lender that they will guarantee the loan if you default.
The SBA’s loan guarantee programs are meant to encourage banks and other lenders to make more loans on a consistent basis. The percentage of the loan that the SBA will guarantee ranges from 50% – 90%, depending on the program and the size of the loan. Loans made under the SBA 7a program get a guarantee of 75% – 85%, while loans made under the SBA Express program only receive a 50% guarantee.
The downside to this is that the SBA can’t speed up your loan process because that burden falls to your lender. In fact, even though the SBA promises a quick turnaround time for the SBA Express loan it typically doesn’t speed up your total loan time because your lender can still take up to 90 days or more.
4. Lender Willingness to Originate Specific Loans
Inefficiency isn’t the only thing that can slow down the lending process with SBA Express loans. Sometimes a lender just doesn’t have the appetite to do your specific loan, and they aren’t likely to tell you that when you apply.
If you submit an application they’ll typically go through the motions because they have to, even though they know they’re unlikely to approve your loan. This can be a huge waste of time and energy for a small business owner who needs to get funded quickly.
There can be a few reasons for this, including:
Too Much Exposure to Similar Loans
This is where the lender already has many outstanding loans like yours and they don’t want to accept additional ones. This happens when management decides they need to get a better mix of loans to reduce their exposure to any one industry, any one type of borrower, any one size of loan, etc.
Bad Experience With Similar Loans
Perhaps the lender has done a number of loans like yours in the past and has had a higher than normal rate of default. The lender will likely avoid similar loans altogether or significantly increase the requirements and qualifications needed for you to get approved.
Inexperience With Your Type of Loan or Business
Maybe the lender isn’t very familiar with your business model or isn’t familiar with what will go into underwriting your loan. Rather than risk putting in time on a loan that might not get approved, they will choose to avoid the ones they’re unfamiliar with.
One thing you can do is put in applications with several lenders, but that comes with its own risks. Namely, you may get hit with multiple hard credit pulls. Also, if you thought working with one inefficient lender would be hard, try working with multiple inefficient lenders at the same time. What you really need is to have someone who knows which lenders are most likely to do your specific loan help you find the right lender.
The SBA Express program doesn’t help speed up the lender’s internal processes. If your lender has inexperienced loan officers, antiquated technology, or redundant layers of management, the loan will take months to get funded. That’s another reason we recommend for businesses who are looking for under $350K in SBA funding to work with SmartBiz.
“SmartBiz’s technology has created an ecosystem for borrowers and lenders. The platform allows us to match the right borrower with the right bank. Different banks will say yes or no to different loans. We added more lenders to our marketplace this year so we can say yes to small businesses more often. Our software can help pair borrowers with the right lender the first time. That means more borrowers getting approved for the amounts they request, with payments they can afford.” – Evan Singer, CEO of SmartBiz.
If you’ve been in business for 2+ years and need up to $350k in funding, we recommend working with SmartBiz. You can apply online, get approved in minutes, and funded within 30 days.
Preferred Lender Program vs SBA Express Program
Slow SBA funding times have been a common complaint since the loan guarantee program began. The SBA developed two programs to help limit funding delays by reducing the burden they place on lenders, the SBA Express Loan Program and the Preferred Lender Program (PLP).
PLP lenders have lots of SBA lending experience and have a history of making good loans. That track record enables the SBA to trust the lender to make SBA loans with lessened oversight on all SBA 7a loans, regardless of size or term. This means that PLP approved lenders can submit underwrite their own loans, without waiting on the SBA approval process.
The SBA Express Program, on the other hand, increases the independence of the lender by reducing their exposure to the loans made under the program. SBA Express Loans are smaller (capped at $350K) and the SBA guarantees a smaller percentage of the loan (50% instead of up to 90%).
Both of these programs are a good effort to speed up the government’s process of approving potential applicants and promising to guarantee the loans, if you’re approved. PLP loans are better for startups looking for capital while Express loans are more for established businesses.
The problem is that neither the PLP or SBA Express Programs help speed up the lender’s internal processes. If your lender has inexperienced loan officers, antiquated technology, or redundant layers of management, the loan will take forever regardless of the SBA. Those are the reasons why traditional lenders take 3 months to get SBA loans completed.
That’s what makes SmartBiz’s SBA 7a loan program so impressive. They can typically get SBA 7a loans funded in under 30 days. If you’ve been in business 2+ years and need up to $350k in funding, we recommend working with SmartBiz. You can apply online and get approved in minutes.
Who An SBA Express Loan is Right For
An SBA Express Loan can be a good fit for strong borrowers seeking up to $350k who aren’t able to qualify for traditional 7a loans. In general, you’ll need:
- Credit score above 680 (check your credit score here for free)
- Debt-service-coverage-ratio (DSCR) of 1.1 or higher
- Positive revenue trends
- Profitable business
Proceeds from the loans can be used for working capital, to refinance business debt, to purchase equipment or commercial real estate, to fund a business acquisition, and more. While the uses of proceeds are flexible, there are strict limits on the borrowing amount ($350k in most cases) and the loans come with higher allowable interest rates (see current SBA loan rates here).
Full List of SBA Loan Programs
SBA Express loans are just one of several SBA loan programs. A lot of these programs are made for specific business situations or borrowers. Regardless of the type of loan program, they can all be time consuming to get funded. Some have options similar to an SBA Express loan while others do not. You can find more information about each type of SBA loan in the table below.
Overview of SBA Loan Programs
|SBA Express||Businesses needing up to $350k faster than you would receive them under a traditional 7a loan.|
|Export Express||Businesses wanting to expand their goods or services export business needing up to $500k.|
|7a Loans||Businesses needing working capital or commercial real estate loans up to $5 million.|
|CAPLines||Businesses with seasonal revenue patterns and who are looking for a working capital line of credit.|
|Export Working Capital||Export heavy businesses needing short term capital.|
|International Trade||Businesses who have been negatively impacted by imports or who need funds to expand their international trade business.|
|Community Advantage||Businesses in underserved communities looking for working capital.|
Useful Definitions for SBA Loans
When applying for SBA express loans, you may run into some terminology that is new to you. The table below has some terms and definitions you may find useful during the application process.
SBA Express Loan Terms and Definitions
|Small Business (Under the SBA)||The SBA defines what a small business is through their size standards. These are based on either employee count or revenue size. |
The general definition of a small business for manufacturing businesses is less than 500 employees. For non-manufacturing businesses it is less than $7.5 million in annual revenue.
|Debt to Income Ratio (DTI)||DTI is used to determine a business’s ability manage monthly debt payments. It is calculated by dividing total monthly debt by gross monthly income, and expressed as a percentage.|
|Debt Service Coverage Ratio (DSCR)||The ratio of available cash to service debt through interest, principal, and lease payments.|
|SBA Guarantee Percentage||The percentage of the loan balance the SBA guarantees, or honors, in the event of a default. If the SBA guaranty percentage is 50%, then upon default the SBA will repay the lender up to 50% of the loan principal.|
|Lease Subordination||A lease subordination guarantees that the SBA lender is positioned ahead of any potential landlord disputes in the event of a default. A lease subordination is required to be signed by the landlord of any leases the business has.|
Bottom Line: Fast SBA Loans
SBA Express loans are known for their faster SBA approval times, but they can carry higher interest rates and shorter repayment terms than other traditional 7a loans. While it helps speed up the SBA review process for lenders, it doesn’t typically get you funded any quicker than a traditional SBA program if your lender is inefficient.
If you need funds quicker than the typical 45 – 90 days that SBA loans take then we recommend applying with SmartBiz. They can get you funded in less than 30 days with more affordable interest rates and longer repayment terms than an SBA Express loan. Get prequalified in less than 10 minutes by filling out their online application.