SBA Express Loans: What They Are and How to Qualify

SBA Express loans offer faster funding than other federally backed loans but smaller borrowing maximums.

Ryan LaneApr 21, 2021
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SBA Express loans are part of the U.S. Small Business Administration’s 7(a) loan program. You can currently take out up to $1 million in these small-business loans from participating lenders as either a term loan or line of credit.

Like other SBA loans, Express loans are a great funding choice because they offer competitive interest rates and flexible terms. If you need less than $1 million, can meet the SBA’s eligibility criteria and want fast financing, consider applying for an Express loan.

What is an SBA Express loan?

An SBA Express loan is a government small-business loan offered by banks and other approved lenders. Here are the key details:

  • Loan amount. SBA Express loan maximums have been temporarily increased from $350,000 to $1 million. After Sept. 30, 2021, that maximum will be permanently reduced to $500,000.

  • Interest rate. Lenders determine their own SBA loan rates but can’t exceed a cap set by the government. For Express loans $50,000 or less, rates can’t be more than the current prime rate plus 6.5%; it’s prime plus 4.5% for loans above $50,000. Those caps put maximum SBA Express loan rates between 7.75% and 9.75% as of this writing.

  • Repayment term. Express loan repayment terms depend on the type of financing you choose and how you use it. Term loans can last up to 10 years, though real-estate purchases can be stretched to 25 years. For revolving lines of credit, repayment is typically up to seven years but can be extended when you initially receive the loan.

  • Fees. SBA Express loan fees are waived through Sept. 30, 2021. You’d typically pay a one-time guaranty fee based on the size of the loan. These fees range from 2% to 3% of the amount the government guarantees if the Express loan defaults. Veteran-owned small businesses aren’t charged guaranty fees on Express loans.

  • Approval time. As the name implies, the SBA aims to process Express loans quickly: It says lender-approved applications will receive a response within 36 hours.

The SBA also offers Export Express loans for exporters only. These loans have a borrowing maximum of $500,000 and an even faster response time of 24 hours.

SBA Express bridge loans were previously available to small businesses in declared natural disaster areas. This pilot program ended on March 13, 2021.

SBA Express loan requirements

Your business must meet the following requirements for the SBA to approve it for an Express loan:

  • Meet the SBA’s definition of a small business.

  • Be a for-profit business operating in the United States or its territories.

  • Have reasonable owner equity to invest.

  • Have already put financial resources, such as personal assets, toward the business.

You'll also have to meet the individual lender’s financial requirements. These can vary, but a minimum FICO score of 650, strong annual revenue and at least two years in business will likely be necessary to get an Express loan. You also may need to put up collateral to borrow more than $25,000.

SBA Express loan vs. 7(a) loan

Express loans have the same basic eligibility requirements as 7(a) loans, and you can use both for working capital, equipment financing, refinancing debt and other business needs. But Express loans differ from 7(a) loans in the following ways:

  • Borrowing maximums are lower. While SBA Express loan maximums have been increased to $1 million through Sept. 30, 2021, that’s still less than the $5 million you may be able to borrow with a 7(a) loan.

  • Rates may be higher. Both Express loan and 7(a) loan rates are tied to the prime rate. But the amount a lender can charge above that rate is greater for Express loans than for 7(a) loans. The maximum 7(a) rate is currently 8% versus 9.75% for an Express loan.

  • Decisions are made faster. Getting approved for a federally backed loan can take time. The SBA speeds up this time frame for Express loans, providing a simpler process for lenders and responses within 36 hours, compared with 5 to 10 business days for 7(a) loans.

  • Less of the loan is guaranteed. If you default on an SBA loan, the government will pay the lender up to 85% of the outstanding balance for 7(a) loans. This guarantee is usually 50% for Express loans, but has been increased to 75% until Sept. 30, 2021, for Express loans of $350,000 or less.

How to get an SBA Express loan

Express loans are available through approved lenders such as Chase and Citizens Bank. You'll need to apply directly with a participating financial institution to get an SBA Express loan.

The best lender for an SBA Express loan will be the one that offers you the lowest interest rate. Shop around — and compare multiple types of small-business loans — to find the right fit for your company.