Which change of ownership rules does SBA Express relax?

Only two rules, and both are narrow. Section B, Ch. 2, Para. A.2, of SOP 50 10 8.1 applies Appendix 15 to SBA Express deals, with these differences:

• Valuation: the lender may do an internal valuation when the Business Purchase Price is $350,000 or less. Appendix 15 removes that option if buyer and seller have a close relationship.
• Collateral: the fully secured test applies, but the lender need not count other commercial real estate held by the borrower or guarantors.

What Express does not relax

• Debt service coverage follows Appendix 15. No reduced ratio applies because the loan is Express.
• Equity follows Appendix 15, not the lender discretion that applies to other Express loans.
• The other Appendix 15 rules still apply, including seller exit and documentation.

Limits on the loan itself

The Express maximum is $500,000, and only a lender with SBA Express authority can make one. It must be a term loan. Section A, Ch. 2, Para. A says change of ownership is not an eligible use for revolving facilities.

SBA's guaranty on an Express loan is 50% (Appendix 16, Para. B.2). The lender keeps more of the risk than on other 7(a) loans. Willingness to make these loans varies by lender.