SBA Express loans are currently offered at interest rate of 4.5% – 6.5% above the prime rate. While SBA Express loan interest rates can be fixed or variable-rate, most lenders tend to offer variable-rate loans, especially for smaller loan amounts.
How Do SBA Express Loan Interest Rates Compare to Other Kinds of SBA Loans?
While SBA Express loans are a great option for businesses that need SBA funding fast, they’re not the only SBA loan option on the market. To see how the SBA Express loan stacks up against the competition, we’ll look at few of the most common SBA loan types to compare and contrast the interest rates:
SBA 7(a) Loans
Like many other kinds of SBA loans, SBA 7(a) loans can have either fixed or variable interest rates. Interest rates for 7(a) loans can be either based on the prime rate, the 1-month LIBOR index + 3%, or the SBA peg rate, each which follow each other very closely. Maximum interest rates are based on one of the indexes just mentioned, as well as the length of the loan term and the amount of money being loaned, as described below:
Terms of 7 years or less:
Less than $25,000: 9.25% (5.00% base rate + 4.25% markup)
$25,000 to $50,000: 8.25% (5.00% base rate + 3.25% markup)
$50,000+: 7.25% (5.00% base rate + 2.25% markup)
Terms of 7 years or more:
Less than $25,000: 9.75% (5.00% base rate + 4.75% markup)
$25,000 to $50,000: 8.75% (5.00% base rate + 3.75% markup)
$50,000+: 7.75% (5.00% base rate + 2.75% markup)
SBa microloans
SBA Microloans can provide up to $50,000 to borrowers, and have significantly more lenient credit requirements than other types of SBA financing. These loans typically have interest rates of between 6.5% and 13%. Rates are generally limited to the cost of funds plus certain percentages, as represented below:
Loans less than or equal to $10,000: Cost of funds + 8.50%
Loans over $10,000: Cost of funds + 7.75%
According to the SBA, as of 2018, the average microloan had a 7.6% interest rate.
SBA Community Advantage Loans
SBA Community Advantage loans, which are administered by community lenders, typically non-profits, are specifically intended to provide funds for traditionally underserved populations. Community Advantage loan interest rates usually vary between 7% and 9%, though this can depend heavily on the lender. In some cases, riskier Community Advantage loans may have interest rates as high as 11%.
SBA 504 Loans
SBA 504 loans have some of the lowest interest rates of any type of SBA financing. Rates are calculated like so:
10-Year Loans 5-year Treasury rate + 1.5% - 3.5% in fees + 0.38% Fixed Fee
20-Year Loans: 10-year Treasury rate + 1.5% - 3.5% in fees + 0.48% Fixed Fee
However, it’s essential to keep in mind that these loans cannot be used for equipment or working capital, and can only be used for the construction or acquisition of owner-occupied commercial real estate.
What Are The Average Interest Rates for Non-SBA Loans?
Now that we’ve compared SBA Express loan interest rates to other kinds of SBA loans, let’s take a moment to compare them to forms of non-SBA financing. First, let’s look at bank loans; with an average interest rate of 3% - 6%, small business bank loans would seem to be a superior alternative to SBA financing. However, there’s a big catch— banks often have incredibly strict credit and financial requirements, so unless your business has incredible credit and lot of money in the bank, it might not get approved. If you can’t get a bank loan, and an SBA loan isn’t your thing, you may want to turn to an online or alternative lender offering non-SBA loans. Many alternative lenders offer small business loans starting at 13% — however, you need to be careful, since some lenders may be offering short term loans with interest rates as high as 70% or even 90%.