SBA Express loans come with many of the same features as the SBA 7(a) loan program that it belongs to, albeit with some key differences. 

Fortunately, SBA Express loan requirements aren’t all that different, and you can actually get approved for this type of loan more quickly than other government-backed small business loans.

If you’re considering an SBA Express loan, here’s what you need to know about the program, the requirements to get approved, and whether or not it’s the right fit for you.

What Is an SBA Express Loan?

The SBA Express loan program is a streamlined program for small businesses. Administered by the Small Business Administration, it’s designed to reduce the paperwork and lengthy timeline that’s associated with most SBA small business loans.

Unlike the SBA 7(a) loan program, which the Express loan is a part of, the maximum loan amount on an Express loan is $500,000 (compared to $500,001 to $5 million). 

What’s more, while lenders that offer SBA loans can take time to underwrite and approve loan applications, you’ll typically get a response from the lender within 36 hours instead of a week or longer.

If you borrow $25,000 or more, the lender may require that you put up collateral to secure the loan. If it’s below that threshold, though, the loan may be unsecured. 

Like other SBA loans, SBA Express loans tend to offer lower interest rates and better repayment terms than a lot of other forms of business financing. 

You may also be able to choose from an installment loan and a revolving line of credit, and if you’re in the business of exporting goods, there’s also an Export Express loan.

What Is Required to Qualify for an SBA Loan?

SBA Express loan requirements closely follow the requirements set out for SBA 7(a) loans. It’s important to keep in mind that when it comes to SBA Express loans, it’s the lender that ultimately determines the credit requirements. 

However, the SBA has some basic requirements that you’ll need to meet to be eligible. More specifically, small businesses must:

• Operate for profit.
• Be engaged in, or propose to do business in, the U.S. or its territories.
• Have reasonable owner equity to invest.
• Use alternative financial resources, such as personal assets, before seeking financial assistance.

In other words, you can’t be a nonprofit organization, you have to do business in the U.S., and you need to have some skin in the game. 

The last part is important because the SBA insures 50% of all SBA Express loans and 90% for SBA Export Express loans. If a small business owner hasn’t invested in their own business, the federal agency might not consider it worth the risk either.

You also can’t operate a business that’s strictly prohibited from the SBA loan program. That includes:

• Businesses that engage in illegal activities, loan packaging, speculation, multi-sales distribution, gambling, investment, or lending.
• Businesses where the owner is on parole.
• Real estate investment firms.
• Firms involved in speculative activities that develop profits from fluctuations in price rather than through the normal course of trade.
• Rare coin and stamp dealers.
• Firms involved in lending activities.
• Firms involved in illegal activities, including ones that engage in the production, servicing, or distribution of otherwise legal products that are to be used in connection with an illegal activity.
• Businesses whose principal activity is gambling.
• Charitable, religious or other nonprofit institutions, government-owned corporations, consumer and marketing cooperatives, and churches and organizations promoting religious objectives.

While eligibility criteria can vary from lender to lender, there are some general things you can expect to need:

• Good Credit: A credit score in the mid-600s or higher is a common minimum requirement, and the better your credit history is, the easier it will be to get approved. Note that lenders may consider both your personal and business credit scores.
• Collateral: If you’re borrowing $25,000 or more, you may be asked to provide some collateral. This can include business assets like equipment, inventory, or accounts receivable. Just keep in mind that if you don’t repay your loan, the lender may seize the collateral and sell it to recoup the remaining balance.
• Strong Revenue: Your ability to repay the debt is another major SBA Express loan requirement. Again, there’s no universal minimum annual revenue threshold you’ll need to be above, but if your numbers fluctuate or you don’t have a long track record of solid revenues, it may be challenging to get approved.
• Operating History: You generally need at least two years in business before you can qualify for most SBA loan programs. Although this timeline may be longer for some businesses.

Types of SBA Express Loans

There are three types of SBA Express loans that you may be able to get for your small business: SBA Express term loans, SBA Express revolving loans, and SBA Export Express loans.

SBA Express Term Loans

This type of loan is an installment loan, which means you’ll receive a lump-sum payment minus any guarantee fees, and then pay back the full loan amount in equal monthly payments. For most uses, SBA Express term loans can be paid back over 10 years. 

However, if you’re using the loan to purchase real estate, you can qualify for a repayment term as long as 25 years.

SBA Express Revolving Loans

With this type of loan, you get a revolving line of credit that you can use, repay and use again — this arrangement functions similarly to a credit card. Instead of paying interest on the total available credit, you only pay it on what you’ve borrowed.

The SBA offers Express lines of credit for up to seven years with maturity extensions permitted at the outset of the loan process. 

SBA Export Express Loans

If your business is an exporter, you may qualify for this separate loan program that offers both term loans and revolving lines of credit. SBA guarantees are 90% for loans of $350,000 or less and 75% for loans that exceed $350,000 — compared to 50% for standard Express loans.

Also, the response time from the SBA on these loans is 24 hours instead of 36 hours, making it a better alternative for that type of small business.

Pros of SBA Express Loans

Faster Turnaround Time

SBA loans can take between 60 and 90 days to fund, and part of the reason is that the federal agency can take 5 to 10 business days to respond to lenders when your application is submitted. 

With SBA Express loans, that time is cut down to 36 hours (or 24 hours for export businesses). Of course, that means that it can still take a while if your lender is dragging their feet. But if you submit all of the required documents quickly, it should speed up the process.

Relatively Low-Interest Rates

Compared to SBA 7(a) loans, you’ll likely end up with a higher interest rate. But compared to bank loans and lines of credit and online business loans, you may still save money with an SBA Express loan.

The maximum interest rate on an SBA Express or SBA Export Express loan is the prime rate plus 6.5% on loans of $50,000 or less and the prime rate plus 4.5% on loans of more than $50,000. 

As of January 2022, the prime rate is 3.25%, giving you a maximum of 7.75% or 9.75%, depending on how much you borrow.

Favorable Repayment Terms

Repayment terms are much longer than what you can get with an online loan and even some bank loans. 

Longer repayment terms can be much more affordable and give you more flexibility with your cash flow. If you’re opting for a revolving line of credit, make sure you discuss loan terms before you close on the loan to make sure it meets your business needs.

Cons of SBA Express Loans

The Wait Time Is Still Lengthy

If you’re comparing SBA Express loans to other SBA loans, you’ll get a faster and more streamlined process with this program. 

However, compared to other forms of business financing, this one takes quite a bit of time. So, consider it only if you don’t need the funding immediately.

The Lender Determined the Criteria

As a government-backed loan, you might think that SBA Express loan requirements would be more uniform. But you’re still at the mercy of the lenders, which means you may need to apply with more than one lender to get the best deal. 

This can be especially frustrating if you’re just on the line in one area or another and one lender denies your application, but another lender might be willing to take it. The only way you’ll know is to apply with more than one bank.

Smaller Loan Amounts and Higher Interest Rates

If you have time to wait for a traditional SBA loan, you’ll get access to higher loan amounts and lower interest rates. That said, if you need the money sooner and don’t need more than $500,000 in funding, the convenience of a faster funding time may be worth it.

Depending on your needs, budget, and timeline, consider all of your options carefully to find the one that’s right for you.

What Is the Application Process for an SBA Express Loan?

The first step to applying for an SBA Express loan is to find an SBA-approved lender. You can search for lenders in your area or apply with a national lender. 

If your bank or credit union offers SBA loans, that can also be a good place to start because you already have a relationship with the financial institution.

The SBA provides a tool called “Lender Match” that you can use if you’re having a hard time finding lenders another way.

Once you find a lender, you’ll fill out an application and provide the following documents and information:

• Owner details
• SBA loan application history
• How you plan to use your SBA Express loan
• Number of staff your business employs and job creation information
• Financial statements, including projections
• Business credit reports
• Business and personal tax returns from the last two years
• A business plan

Check with the lender to find out if you need to provide any additional information or documentation on top of these. 

Once you’ve submitted everything, the lender will underwrite your application and involve the SBA as well. If approved, it may still take 30 to 60 days to fund. Once your loan has been funded, you can use your funds as you desire.

FAQs

Is It Hard to Get an SBA Express Loan?

It can be difficult to get an SBA Express loan if your business is relatively new, you don’t meet other eligibility requirements, or if you don’t have a strong business credit history or revenues.

Review what lenders are looking for to determine if you need to address some potential issues before you apply.

For example, you may need to build business credit, get some collateral, or make any other adjustments to achieve your goal.

What Credit Score Do You Need for an SBA Express Loan?

Credit score requirements can vary by lender, but many experts recommend having a personal credit score in the mid-600s or higher. 

Remember, though, that your credit score is only one part of the equation. Even with stellar credit, it can still be difficult to get an SBA Express loan if you don’t meet other criteria.

If your credit score isn’t in good enough shape to get an SBA Express loan, take some time to work on improving it before you submit your application.

Do SBA Express Loans Require Collateral?

If you’re borrowing $25,000 or more, the lender may require that you use collateral to secure the loan. Speak with your lender to find out what their requirements are and what you can use as collateral.

Again, options can include various business assets, such as inventory, accounts receivable, equipment, vehicles, and more. 

CreditStrong for Business is the only 0% interest business credit builder in the nation

Start Building