The SBA’s 7(a) loan guarantee program guarantees loans of up-to $5 million. But businesses operating in Renton need much less than that for their business purposes. For this reason, the SBA has specifically developed a program so as to make loans more easily available to businesses. This new program is the ‘SBAExpress loan’ that has a maximum size of $350,000 and processes within 36 hours.
This streamlined process is made possible by agreements with qualified lenders so as to make credit and eligibility determinations without direct involvement of SBA. This program is an easy entry for members to apply for 7(a) loans. Borrowers can apply for loans using their own forms and processes without depending on SBA’s official paperwork.
The popularity of SBAExpress lie in the fact that lenders are not required producing collaterals against loans under $25,000. There are no bounds for amount exceeding $25,000 and up-to $150,000. But for higher loans SBA’s general collateral policy applies.
SBAExpress loans can be used for the following purposes:
- For purchasing new properties and land, expansion of existing facilities and coverage of new construction.
- For gaining access to long term working capital that includes purchase of inventory or payment of accounts payable.
- Acquiring machinery, furniture, equipment, fixtures, materials and supplies.
- For acquiring an existing business.
- Refinancing existing businesses that are not yet properly established.
- Meeting short term working capital needs that can be contract performance, export production, seasonal financing, construction financing, financing against existing inventory and receivables.
Interest rates on SBAExpress are in accordance to the prime rate (published in Wall Street Journal) that may be fixed or variable. Interest rates are negotiable for lenders and borrowers. SBA, however, allows 6.5 percent over prime rate for loans of $50,000 or less. Revolving loans of up-to seven years is available under SBAExpress with maturity extensions permitted at outset.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to