For small businesses looking for affordable financing the options the options tend to be limited these days. While alternative lenders approve a much higher percentage of loans than traditional banks, small banks and community lending institutions, their rates can be unaffordable.
If you are a business owner who has looked at traditional financing for smaller business loans, many banks won’t touch your loan request unless you’re seeking, at least, $500,000 in financing. This goes for both traditional banks, and SBA lenders.
Thankfully, the SBA Express loan program is available to help small businesses obtain financing up to $350,000 without extensive paperwork and a long wait for approval and funding.
What is the SBA Express Loan Program?
To understand the SBA Express business financing program one must first understand how SBA loans works. The SBA doesn’t actually loan money directly to small businesses, but instead gives authorization to SBA Express lenders to originate loans to small companies and in return the SBA covers up to 50% of the lenders’ losses should the small business not repay the loan.
The SBA Express loan program is part of the SBA 7(a) program, the Small Business Administration’s flagship program. Lenders participating in the SBA Express loan program provide financing (both term loans and lines of credit) up to $350,000 with rates ranging from 6-8%.
What sets the SBA Express program apart from the other forms of SBA financing is the reduced amount of documentation required — the lender uses their own documentation and a single SBA express borrower form — which leads to a quick turnaround by the SBA (which takes about 24 hours after a lender submits application to SBA).
Advantages of the SBA Express Loan Program?
- Rates between 6-8%
- Repayment terms up to 7 years
- Fast turnaround by the SBA (24 hours after lender submits to SBA for approval)
- Reduced paperwork and documentation
- Wide range of uses
- Low fees
SBA Express Loan Uses?
- Inventory financing
- Short-term working capital
- Long-term working capital
- Revolving financing
- Equipment, machinery and supply purchases
- Business Renovations
SBA Express Fees
- Loans up to $150,000 (12 month term or longer): 0% out fees for smaller loans
- Over $150,000 (12 month term or longer): 3% of the portion the SBA guarantees
How to Secure SBA Express Financing
- Step 1: Apply to delegated SBA Express Lender
- Step 2: SBA lender approves financing
- Step 3: SBA lender submits to SBA for final approval
- Step 4: SBA provides decision within 24 hours
Documentation Required For SBA Express Financing
- 2 years business tax returns
- 2 years personal tax returns
- Interim income statement Interim balance sheet List of all of the business’ debt
- Business entity documents