If you’re looking for small business financing and have decent credit, loans from the Small Business Administration (SBA) can provide great rates and terms. They can help you get access to the cash you need to grow your business.
At the same time, most SBA programs can take weeks or months to process your application and get you your money.
When you’re in a hurry, you might want to consider the SBA Express loan. This program expedites the loan process and can approve you in as little as 36 hours.
Key Points
• SBA Express loans offer a quicker approval process, with responses from the SBA typically within 36 hours, making them ideal for businesses needing fast access to capital.
• Borrowers can receive up to $500,000, which can be used for working capital, equipment purchases, or other business needs.
• The SBA guarantees up to 50% of the loan, reducing risk for lenders and improving approval chances for borrowers.
• SBA Express loans involve less paperwork and simpler application processes compared to other SBA loan programs, making it easier for small businesses to apply.
• If you don’t qualify for an SBA loan, online lenders can offer short-term business loans, business lines of credit, startup business loans, and more.
What Is an SBA Express Loan?
Part of the SBA loan program, the SBA Express loan provides the same SBA-backed financing as other SBA loan programs like 504 and 7(a) loans, but faster. It’s ideal for businesses that can’t spend months waiting to access capital.
Loan Amounts
Borrowers can get up to $500,000 with the SBA Express loan program. Collateral is not required for loans up to $50,000.
Interest Rates
There’s not a set interest rate for the SBA Express loan. Instead, rates are set by the SBA-approved lenders.
However, the rate for an SBA Express loan cannot exceed the SBA maximum, which is based on the federal prime rate. Loan rates may be fixed or variable.
Other factors go into determining the interest rate you’ll pay for your Express loan. If your credit is excellent, you may qualify for lower interest than if your credit score is low.
Recommended: What Is the Minimum Credit Score for a Business Loan?
Repayment
Repayment terms may also vary, depending on your qualifications, how much you borrow, and what you intend to use the funds for.
SBA Express loans for real estate have repayment periods of 25 years. If the loan is for equipment, working capital, or inventory, the repayment period is 10 years. A line of credit through the Express loans program also has a repayment period of up to 10 years.
Processing Time
The appeal of the SBA Express loan is its fast processing time. The SBA will review your application within 36 hours and give its decision. Funding times average five to 30 days, but may be up to 60 days depending on your lender.
Approval and Turnaround Time
Once you’ve been approved for an SBA Express loan, you’ll need to review the loan agreement to understand how much interest you’ll be paying on the loan and how long you have to pay it back.
After you sign the agreement, the lender will process it and send the funds to your account. Each lender is different in how quickly it will send those funds. Some can send them the same day, while others take a few days or even weeks.
Recommended: How to Get Fast Business Loans
Why Consider an SBA Loan?
When it comes to comparing conventional vs. SBA loans, SBA loans are often seen as preferable because they offer lower interest rates than many banks, credit unions, or online lenders can provide. Also, they tend to have the longest repayment periods, which means they require lower monthly payments over a longer period of time. (Keep in mind, though, that longer payment periods typically mean you’ll pay more in interest overall.)
Collateral requirements for an SBA loan may also be lower than banks require.
Recommended: Types of Business Insurance
Alternatives to an SBA Loan
That being said, not everyone is eligible for an SBA loan. Typically, SBA-approved lenders want to see personal credit scores of 640 to 700+. If your credit isn’t in this range, you might be turned down for an SBA loan.
If that’s the case, you may want to look instead to alternative online lenders who consider other factors beyond credit scores when considering applicants for small business loans. But know that if you have poor credit, you likely will only qualify for loans with high interest rates.
You may also want to explore small business grants, which, unlike loans, do not have to be paid back.
Recommended: 15 Types of Business Loans to Consider
SBA Express Loan Requirements and Eligibility
There are two hoops to jump through when it comes to SBA Express loan requirements.
The first is with the SBA. To be eligible for any 7(a) loan (a category into which the Express loan falls), your business must:
• Be for profit
• Be an eligible business in the U.S. or its territories
• Be creditworthy
• Have a reasonable ability to repay the loan
The lender you apply with may also have requirements, such as having a certain credit score or annual revenue.
There are also certain businesses that are not eligible for any SBA loans. This list includes (but isn’t limited to) businesses that are:
• Nonprofit organizations
• Life insurance companies
• Financial lending businesses
• Businesses engaged in any illegal activity
• Loan packagers
• Pyramid sale distributors
How Can Funds from an SBA Express Loan Be Used?
Just as with SBA 7(a) loans, funds from SBA Express loans can be used for business-related expenses.
You can use the loan to purchase equipment, machinery, computers, office supplies, and/or inventory. You can purchase real estate or renovate an existing building. Or you can use the funds as working capital when business is slow.
SBA Express Loans vs. 7(a) Loans
While the SBA Express loan falls under the umbrella of the 7(a) loan program, there are some key differences to note.
How long you have to pay back SBA loans depends on what you plan to use the loan for. If it’s for real estate, you could have a repayment period as long as 25 years, but if it’s for equipment, you might just have 10 years. This is the same for both 7(a) loans and Express loans.
Recommended: What Is Capital Structure?
The Takeaway
SBA Express loans are a streamlined loan option under the U.S. Small Business Administration (SBA) program, offering up to $500,000 with faster approval times compared to standard SBA loans. These loans provide businesses with working capital or funding for growth, often with less paperwork and flexible terms.
If your credit and other qualifications mean you’re eligible for a low-interest SBA loan, but you don’t have time to wait up to 90 days for a 7(a) loan, an SBA Express loan could be a great solution to get you access to affordable capital quickly.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
What is an SBA Express loan?
An SBA Express loan provides up to $500,000 to small business owners. Unlike other SBA loans, the application process is expedited, and the SBA will review it within 36 hours. However, your lender may take 30-60 days to process your application and get you your funds.
What are the pros and cons of an SBA Express loan?
The biggest advantage of an SBA Express loan is how fast your application will be processed compared to other SBA loans, allowing you to get your cash faster. A drawback may be that only those with good credit may qualify, and funding times may still be lengthy compared to traditional business loans.
What can I use an SBA Express loan for?
Just as with any SBA loan, you can use your Express loan to cover business expenses like buying equipment or inventory. You can also hire employees or purchase real estate.
Photo credit: iStock/Rockaa
SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOSMB-Q424-029