Does an SBA Express loan require a down payment?
Short answer
SBA sets no fixed percentage. Whether to require equity is left to the lender's business judgment. A loan to buy a business is the exception, because Appendix 15's equity rules apply. Source: SOP 50 10 8.1, Sec. B, Ch. 2, Paras. A.2 and C.2.b.
SBA sets no fixed percentage for most SBA Express loans. SOP 50 10 8.1, Sec. B, Ch. 2, Para. C.2.b, says the credit decision, including whether to require an equity injectionThe money or assets you put into the deal yourself. , is left to the lender's business judgment.
What the SOP adds
- If the lender requires equity and verifies it on similar non-SBA loans, it must verify it on the SBA Express loan too (Para. C.2.b; Sec. B, Ch. 6, Para. D.3).
- Early defaults are reviewed by SBA under SOP 50 57, so lender judgment is still checked after the fact.
- The start-up minimum of at least 10% of total project costs appears in the Standard 7(a) and 7(a) Small chapters. The SBA Express section does not state one.
The exception: buying a business
SBA Express can finance a change of ownership, but Appendix 15's equity requirements come with it (Sec. B, Ch. 2, Para. A.2). An Initial Acquisition requires 10%, which cannot be reduced or eliminated. Seller debt and other limited sources can supply no more than half of the required equity injection.
Expect your lender to have its own rule
SBA Express lenders use their own procedures for similarly sized non-SBA loans. A lender may ask for equity even when SBA does not. Policies vary, so ask before you apply.
The loan must still show reasonable assurance of repayment (Para. C.2.b).
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