The SBA Loan Program has several different funding instruments available to entrepreneurs of all types. One of the most popular is the SBA Express Loan. Just as the name implies, this loan is one that takes a fraction of the typical approval time. In most cases, applicants can expect an approval decision in as little as 36 hours – in some cases less. Before you begin your application process, it’s important that you understand the details of this option.
How much can you apply for?
Most 7(a) loans through the SBA have a borrowing limit of $5 million dollars, but the Express option is different. When seeking funds through the SBA Express Loan Program, the maximum amount you can apply for is $350,000. Capital through this type of loan can come in the form of credit or a term loan.
How long does it take to disburse funds with an Express Loan?
Getting an approval on your Express Loan is relatively quick and can come within 36 hours. But it’s important to understand that there’s a difference between approval and disbursal. In most cases, funds are not disbursed to the applicant for 90 days. The wait has been reduced greatly during COVID, but in non-pandemic times, applicants can expect to receive their funds somewhere around the 90-day mark.
What can an SBA Express Loan be used for?
An Express Loan can be used in a number of different areas including the following:
- Long-term working capital: The proceeds from an Express Loan can be used as working capital, helping you fund the day-to-day needs of your business. These funds can also be used to purchase inventory or for accounts payable.
- Short-term working capital: Funding for a seasonal effort, to assist on an important project or contract, or financing construction.
- Purchasing real estate: Purchasing real estate such as a building to house your operations.
- Equipment, furniture, supplies, and materials.
- Renovation costs on a new or existing building.
- Establishing or acquiring a new business or possibly expanding your existing operations.
- Refinancing existing business debt.
An SBA Express Loan cannot be used to reimburse, pay past due taxes, or for any purpose that would jeopardize the eventual servicing of the debt.
What are the requirements for an SBA Express Loan?
This is the most important question and the one that applicants ask all the time. So, with that, let’s spend a little time understanding the requirements. They are as follows:
- Your business must be profitable: Your business has to be able to show a profit. This will give lenders confidence that you will be able to repay the amount you are looking to borrow.
- Must be based in the United States: The business you’re looking to secure funds for must be domestic; it cannot be a foreign operation.
- Two years of operation: You must be able to show proof that your business has been operating for at least two years.
- Meet SBA small business size standards: Meeting SBA size standards is a requirement. Take the time to understand where your business stands in relation to these standards.
- Prove that your business is in need: No matter what industry you’re operating in, you must be able to show that there is a need for the funds you’re applying for.
- Previous financing: You must be able to show the lender that your business has already been financed at some point through an alternative means. This can be self-financing, relatives, investors, or a venture capitalist.
- Proof of use: The lender will want to see that the funds are going to be used responsibly. This is where a business plan is typically requested.
- Government issues: In order to qualify for an SBA Express Loan, you must not have any previously outstanding government debt.
The Coley Group Can Help Craft Your Perfect Business Plan For An SBA Loan
An Express Loan is another incredible funding instrument provided by the SBA. As is always the case when applying with this agency, a business plan is necessary. If you’re interested in applying for a loan of this type, The Coley Group can manage all of your business plan needs. Feel free to contact us today for more information!
