How is SBA Express different from a standard 7(a) loan?
Short answer
SBA Express tops out at $500,000 with a 50% guaranty, and the lender decides. A Standard 7(a) is more than $350,000 up to $5,000,000, with a 75% guaranty. SBA or a Preferred Lender Program (PLP) lender decides it (SOP 50 10 8.1, Sec. B, Chs. 1-2).
SBA Express is smaller, carries a lower guaranty and leaves more to the lender. Standard 7(a) is larger and has more SBA-set credit tests (SOP 50 10 8.1, Sec. B, Chs. 1 and 2).
Side by side
- Size: SBA Express goes up to $500,000. Standard 7(a) is more than $350,000 up to $5,000,000.
- Guaranty: 50% for SBA Express. 75% for Standard 7(a) (Appendix 16).
- Credit decision: the SBA Express lender alone. For Standard 7(a), SBA or a lender with PLP authority.
- Revolving credit: permitted under SBA Express. Standard 7(a) is not a revolving product (Sec. A, Ch. 3, Para. B.4).
- Coverage: no fixed ratio for most SBA Express loans. 1.15:1 for Standard 7(a) (Sec. B, Ch. 1, Para. C).
- Start-up equity: SBA Express leaves it to the lender. Standard 7(a) requires at least 10% of total project costs.
- Collateral: none required at $50,000 or less on SBA Express, and lender policy above that. Standard 7(a) must be fully secured, using available fixed assets (Appendix 19, Para. B.1).
- Maximum variable rate on SBA Express: Prime plus 3.0 to 6.5 percentage points, depending on loan size. On Standard 7(a): Prime plus 3.0 percentage points.
Upfront fees
Both pay the same FY2027 percentage schedule on the guaranteed portion. SBA Express has the smaller guaranteed share (Information Notice 5000-881797).
Sources
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