What debt service coverage does SBA Express require?
Short answer
SBA sets no fixed ratio for most SBA Express loans. The lender must show reasonable assurance of repayment (SOP 50 10 8.1, Sec. B, Ch. 2, Para. C.2.b.iii). Buying a business is different: Appendix 15 requires 1.15:1 or 1.25:1.
SBA sets no fixed debt service coverageCash available for loan payments, divided by those payments. Above 1 means the cash covers them. Full definition ratio for most SBA Express loans. SOP 50 10 8.1, Sec. B, Ch. 2, Para. C.2.b.iii says the credit analysis must demonstrate a reasonable assurance of repayment. It names no number, and the lender's own standards apply.
How that compares
- 7(a) Small: 1.10:1 for purposes other than changes of ownership (Para. C.2.a).
- Standard 7(a): 1.15:1 (Sec. B, Ch. 1, Para. C).
If a 7(a) Small applicant does not reach the required ratio, the loan must follow Standard 7(a) or SBA Express procedures (Para. C.2.a).
Buying a business
SBA Express gets no reduced standard on a change of ownership (Para. A.2.b). Appendix 15, Para. C.2.b sets the minimum by deal type:
- Initial Acquisition, Owner Buyout, and employee stock ownership plan (ESOP) and Cooperative transactions: 1.25:1.
- Business Expansion: 1.15:1.
What lenders look at
The lender's analysis may include credit scoring, but a scoring model can only supplement its usual credit analysis (Para. C.2.b.iv). Coverage minimums vary by lender, so ask which ratio the lender uses and how it calculates cash flow.
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