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SBA Express Loans vs. Standard SBA 7(a) Loans
Let's review some of the major differences between the SBA's standard 7(a) and Express loans.
When it comes to getting a loan under the SBA 7(a) program, borrowers have a few options. The most popular among them include the standard SBA 7(a) loan, and the SBA Express loan. In this article, we’ll review some of the major differences between the two, in order to help you determine which type of financing might be the best for your small business.
SBA 7(a) Standard vs. Express Loans: What’s The Difference?
The standard SBA 7(a) loan and the SBA Express loan have a variety of differences, including:
Maximum Loan Amount:
Standard SBA 7(a) Loan: $5 million
SBA Express Loan: $500,000
Average Approval Time:
Standard SBA 7(a) Loan: 60-90 days
SBA Express Loan: 45-60 days
Required Collateral:
Standard SBA 7(a) Loan: Typically requires collateral equal to loan amount
SBA Express Loan: No required collateral under $25,000, and lenders can use their existing collateral policy for loans between $25,000 and $500,000
Credit Score Requirements: 640 minimum, with most lenders preferring 680+
Loan Terms:
Working Capital: Up to 10 years
Equipment: Up to 10 years
Real Estate: Up to 25 years
Businesses must operate for profit
Businesses must be in an approved industry (for example, no lending, gambling, speculation, real estate investing, or illegal businesses)
Businesses must already have exhausted other financing methods (personal savings, friends and family, bank loans, etc.)
What are the differences between SBA Express Loans and Standard SBA 7(a) Loans?
The standard SBA 7(a) loan and the SBA Express loan have a variety of differences, including:
- Maximum Loan Amount:
- Standard SBA 7(a) Loan: $5 million
- SBA Express Loan: $350,000
- Average Approval Time:
- Standard SBA 7(a) Loan: 60-90 days
- SBA Express Loan: 45-60 days
- Required Collateral:
- Standard SBA 7(a) Loan: Typically requires collateral equal to loan amount
- SBA Express Loan: No required collateral under $25,000, and lenders can use their existing collateral policy for loans between $25,000 and $350,000
- Maximum Loan Amount:
What are the eligibility requirements for SBA Express Loans?
To qualify for an SBA Express loan, businesses must meet the eligibility requirements determined by the SBA 7(a) program. These requirements include:
- Operating for profit in the USA
- Having been in operation for at least two years
- Meeting SBA size standards
- Having already looked for alternative funding
- No delinquencies or debt obligations to the US government
- Good character and a credit score of 600-650
Certain businesses may be ineligible, and additional documents such as a personal history statement and financial projections may be required. If approved, the funds will be disbursed within 90 days and a guaranty fee will be required.
What are the advantages of SBA Express Loans over Standard SBA 7(a) Loans?
The main advantage of SBA Express Loans over Standard SBA 7(a) Loans is speed. SBA Express Loans can cut down the entire loan approval process by a month or more, making them ideal for businesses in a financial crunch due to unexpected expenses or needing new working capital to finance a big order or a busy season. Additionally, SBA Express Loans have a maximum loan amount of $350,000, with no minimum, while Standard SBA 7(a) Loans have a maximum loan amount of $5 million. SBA Express Loans also do not require collateral under $25,000, and lenders can use their existing collateral policy for loans between $25,000 and $350,000, while Standard SBA 7(a) Loans typically require collateral equal to the loan amount.
Sources: www.sbaexpress.loans/blog/sba-express-vs-standard-sba-7a-loans www.sba7a.loans/sba-7a-loans-small-business-blog/what-are-the-sba-7a-loan-programsWhat are the disadvantages of SBA Express Loans compared to Standard SBA 7(a) Loans?
The main disadvantage of SBA Express Loans compared to Standard SBA 7(a) Loans is the maximum loan amount. SBA Express Loans have a maximum loan amount of $350,000, while Standard SBA 7(a) Loans have a maximum loan amount of $5 million. Additionally, SBA Express Loans typically require no collateral under $25,000, while Standard SBA 7(a) Loans typically require collateral equal to the loan amount.
Source: www.sbaexpress.loans/blog/sba-express-vs-standard-sba-7a-loans
The Similarities Between Standard 7(a) and SBA Express Loans
Despite their differences, SBA 7(a) loans and SBA Express loans have a number of major similarities, including:
Plus, both kinds of loans are subject to general SBA eligibility requirements, meaning:
When Is An SBA Express Loan Your Best Option?
The main benefit of the SBA express loan is speed; getting an SBA Express loan can cut down the entire loan approval process by a month or more. So, if your business is in a financial crunch due to unexpected expenses, or needs new working capital to finance a big order or a busy season, getting an SBA Express loan could be the perfect solution.
Loan Comparison Table
SBA Express | Standard SBA 7(a) | |
|---|---|---|
Maximum Loan Amount | $500,000 | $5 million |
Average Approval Time | 45-60 days | 60-90 days |
Required Collateral | No required collateral under $25,000, and lenders can use their existing collateral policy for loans between $25,000 and $500,000 | Typically requires collateral equal to loan amount |