SBA Express Loan

The Small Business Administration (SBA) offers promising businesses that might not otherwise qualify for business loans the chance to get the money they need to make their business continue to succeed.

Rather than actually administering loans, the SBA attempts to make up for a business' lack of collateral by guaranteeing a portion of a local lender's loan. This lowers the risk to the lender, thus getting the ball rolling on competitive business financing that a low-asset business might otherwise be unable to access. The SBA offers several types of business finance loan-backing programs.

In many cases obtaining an SBA-backed loan is a lengthy process. The good news is that the SBA offers an express loan for its most common loan type-the 7(a) loan. While it is not always possible for a small business to receive SBA Express loan backing, it is a very attractive service. Qualifying businesses and lenders may enjoy a turn-around-time of no more than thirty-six hours, making this a very quick loan processing service that can provide borrowers with up to $350,000 in a very short amount of time.

To have access to the SBA Express loan program borrowers must first meet the qualifying criteria for a 7 (a)-type SBA loan. These criteria include limits to the size of the business, which types of businesses are eligible to apply and to the use of granted funds.

In general, businesses are expected to use the funds for development or expansion of for-profit companies-businesses with credit problems or a failure to consistently earn profits and pay bills will have a difficult time gaining SBA backing for any type of loan. The SBA-like any other concern involved in business finance-is not eager to support businesses that seem unlikely to succeed.

The SBA will typically only overlook lack of collateral in a weak loan application, meaning that a strong business plan and a good business history are very important in securing SBA backing. Also, the SBA does not aid already subsidized concerns such as those involved in agriculture or religion. Other types of businesses may not qualify.

SBA Express Loan Fast Facts:

• Because of the very rapid turnaround time for SBA Express loans, the SBA will back only 50% of the loan principle, as opposed to the more common 75%.


• The SBA has maximum interest rates in place for all its backed loans. For SBA Express loans, the interest rate is held to 4.5% above prime interest rates for loans over $50,000, and 6.5% for loans below this amount.


• Broad lender discretion-to expedite fast service-means that in many cases, approval rests with qualified lenders. Lenders are granted the right to use their existing collateral policies for loans between $25,000 and $150,000-funds above this range must follow the SBA's collateral policy, while the SBA does not require borrowers of loans below $25,000 to produce collateral.

To find out if your business qualifies for an SBA Express loan, the best move is to consult a lending company. A bank's loan officer can be a great resource-these professionals build their careers by helping businesspeople get access to the funds they need to keep developing their small businesses.