SBA Express Loans: What they are & how to apply

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Sometimes an opportunity may come up or an emergency may arise and your small business will need cash fast. That’s when the SBA Express Loan may help. If you’re looking for small business financing and have decent credit, loans from the Small Business Administration (SBA) can provide great rates and terms. They can help you get access to the cash you need to grow your business. However, most SBA programs can take weeks or months to process your application and get you your money. When you’re in a hurry, you might want to consider the SBA Express loan. This program expedites the loan process and can approve you in as little as 36 hours.

What is an SBA Express Loan?

As part of the SBA 7(a) loan program, the SBA Express loan provides the same SBA-backed financing as other SBA loan programs like 504 and 7(a) loans, but faster. It’s ideal for businesses that can’t spend months waiting to access capital.

Loan amounts

Borrowers can get up to $350,000 with the SBA Express loan program. Collateral is required for loans greater than $25,000.

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Interest rates

There’s not a set interest rate for the SBA Express loan. Instead, rates are set by the SBA-approved lenders. However, the rate for an SBA Express loan cannot exceed the SBA maximum, which is based on the prime rate, the London Interbank Offered Rate (LIBOR) rate, or an optional peg rate. Loan rates may be fixed or variable. Other factors also go into determining the interest rate you’ll pay for your Express loan. If your credit is excellent, you may qualify for lower interest than if your credit score is low.

Repayment

Repayment terms may also vary, depending on your qualifications, how much you borrow and what you intend to use the funds for. SBA Express loans for real estate have repayment periods of 25 years. If the loan is for equipment, working capital, or inventory, the repayment period is 10 years. A line of credit through the Express loans program has a repayment period of up to seven years with maturity extensions permitted.

Processing time

The appeal of the SBA Express loan is its fast processing time. The SBA will review your application within 36 hours and give its decision. Note, however, that the lender you apply with may add more time to that processing period—up to 60 days. But still, these are among the fastest SBA loans you can apply for.

Approval and turnaround time

Once you’ve been approved for an SBA Express loan, you’ll need to review the loan agreement to understand how much interest you’ll be paying on the loan and how long you have to pay it back. After you sign the agreement, the lender will process it and send the funds to your account. Each lender is different in how quickly it will send those funds. Some can send them the same day, while others take a few days or even weeks.

Why consider an SBA Loan?

When it comes to comparing conventional vs. SBA loans, SBA loans are often seen as preferable because they offer lower interest rates than many banks, credit unions or online lenders can provide. Also, they tend to have the longest repayment periods, which means they require lower monthly payments over a longer period. Collateral requirements for an SBA loan may also be lower than banks require.

Other options than an SBA Loan

Not everyone is eligible for an SBA loan. Typically, SBA-approved lenders want to see personal credit scores of 640 to 700+. If your credit isn’t in this range, you might be turned down for an SBA loan. If that’s the case, you may want to look instead to alternative online lenders who consider other factors beyond credit scores. But know that if you have poor credit, you likely will only qualify for loans with high-interest rates. You may also want to explore small business grants, which, unlike loans, do not have to be paid back.

SBA express loan requirements and eligibility

There are two hoops to jump through when it comes to SBA Express loan requirements. The first is with the SBA. To be eligible for any 7(a) loan (a category into which the Express loan falls), your business must:

  • Be for-profit
  • Do business in the U.S. or its territories
  • Have a reasonable amount of owner equity to invest
  • Have used other financial resources like personal assets before applying for a loan

The lender you apply with may also have requirements, such as having a certain credit score or annual revenue. Certain businesses are not eligible for any SBA loans. This list includes (but isn’t limited to) businesses involved in:

  • Illegal activities
  • Loan packaging
  • Gambling
  • Real estate investing
  • Speculative activities
  • Pyramid sales

If you’re not sure if your business is eligible, check the SBA’s list.

How can funds from an SBA Express Loan be used?

Just as with SBA 7(a) loans, funds from SBA Express loans can be used for business-related expenses. You can use the loan to purchase equipment, machinery, computers, office supplies, and/or inventory. You can purchase real estate or renovate an existing building, or you can use the funds as working capital when business is slow.

SBA Express Loans vs. 7(a) Loans

While the SBA Express loan falls under the umbrella of the 7(a) loan program, there are some key differences to note.

7(a) Loans

  • SBA Turnaround: 5-10 business days
  • Lender Turnaround: 60-90 days
  • Amount: $5 million

Express Loans

  • SBA Turnaround: 36 hours
  • Lender Turnaround: 30-60 days
  • Amount: $350,000

How long you have to pay back SBA loans depends on what you plan to use the loan for. If it’s for real estate, you could have a repayment period as long as 25 years, but if it’s for equipment, you might just have 10 years. This is the same for both the 7(a) loans and Express loans.

The Takeaway

If your credit and other qualifications mean you’re eligible for a low-interest SBA loan, but you don’t have time to wait up to 90 days for a 7(a) loan, an SBA Express loan could be a great solution to get you access to affordable capital quickly.

 

Learn more:

This article originally appeared on lanterncredit.com and was syndicated by MediaFeed.org.

 

The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

 

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If you meet one or more lenders’ and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and Disclosures, Terms of Service, and Privacy Policy.

 

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SoFi Lending Corp. (“SoFi”) operates this Student Loan Refinance product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lender’s receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and DisclosuresTerms of Service, and Privacy Policy.

 

Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).

 

Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 01/31/22. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.

 

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<h2>More from MediaFeed:</h2>

<h1>What happens if you just stop paying your student loans</h1>

 

 

If your student loan payments seem overwhelming, you should know that you’re not alone. Americans are shouldering a growing student debt burden; In fact, US borrowers owe a combined $1.7 trillion in student loan debt, according to the Federal Reserve.

 

For federal student loans, if a borrower fails to make payments on a loan for more than 270 days, the loan will go into default. Having trouble paying off student debt is not uncommon.

 

According to the latest figures as of the publication date of this article, 9.7% of the borrowers who started repaying federal student loans in 2017 defaulted within the next three years.

 

Related: Do
student loans count as income?

 

AaronAmat / istockphoto

 

Given the tough job market and rising cost of living in urban areas, it’s completely understandable that paying off your student loans is a challenge.

 

But if you just stop making payments, there can be serious, long-lasting consequences. Ignoring your debt can seem like the easy solution, but in the long run, it actually makes things worse.

 

There are ways to deal with your student loan debt in a constructive way—you’re never out of options.

 

 

fizkes / istockphoto

 

The short answer is no, if you’re not part of the Public Service Loan Forgiveness Program. Unlike other forms of debt, such as home and auto loans, student loans generally cannot be discharged during bankruptcy. Borrowers are still required to repay student loans even if they don’t graduate or are struggling to find a job in your field.

 

simonapilolla / istockphoto

 

Ignoring your student loans will likely result in an increasing balance. In addition to interest that accrues over time, failing to repay a student loan on time can result in additional fees if your debt gets moved into collections.

 

Because on-time payments account for a portion of a borrower’s credit score, failing to make payments can negatively impact a person’s credit score. Having a credit score on the low end of the spectrum can impact your ability to get a mortgage, car loan, credit card, or apartment lease.

 

 

dusanpetkovic / istockphoto

 

If you default on federal student loans, the government can take your tax refund or up to 15% of your wages. You can also be sued, though this is more common with private loans.

 

 

artisteer / istockphoto

 

There is no statute of limitations for federal student loans. That means you can be sued at any point for not paying your loans, as long as you’re alive.

 

There is a statute of limitations for private student loans, which is set by individual states and generally ranges from three to 10 years. But even this limit just means the lender can’t sue you anymore—it doesn’t mean the loan goes away or they stop trying to collect what is owed.

 

PeopleImages

 

Are there ways to get out of paying student loans? There are some temporary solutions that allow borrowers to temporarily stop making payments on their student loans.

 

 

DepositPhotos.com

 

For federal student loans, you can temporarily pause payments by requesting a deferment or forbearance. You might qualify if you’re still in school at least part-time, unable to find a full-time job, facing high medical expenses, or dealing with another financial hardship. The type of loan held by the borrower will determine whether they can apply for a deferment or forbearance.

 

 

Youngoldman / istockphoto

 

Federal student loans can only be deferred for up to three years. There are two types of forbearance; general and mandatory. Borrowers facing financial difficulties can request a general forbearance, and their loan servicer determines whether or not they qualify. General forbearance is awarded in 12 month increments, and can be extended for a total of three years.

 

DepositPhotos.com

 

Loan servicers are required to award qualifying borrowers a mandatory forbearance. Qualifications include participating in AmeriCorps, National Guard duty, or medical or dental residency.

 

The Federal Student Aid website has a full list of criteria for mandatory forbearance. Mandatory forbearances are also granted in 12 month increments, but can be extended so long as the borrower still meets the criteria to qualify for mandatory forbearance.

 

 

zabelin / istockphoto

 

Borrowers who enroll in an income-based repayment plan, can qualify to have their loan balance forgiven after a certain amount of time, the amount of time depends on the plan. (Keep in mind, you’d still have to pay taxes on the amount forgiven.)

 

 

DepositPhotos.com

 

In rare cases, certain loans can be cancelled or discharged , if your school closes while you’re enrolled or you are permanently disabled. For obvious reasons, these aren’t options to count on, so you can assume your loans will be sticking with you.

 

 

Milkos

 

Private lenders sometimes offer relief like forbearance when you’re dealing with financial hardship, but they aren’t required to. If you have a private student loan, check with your lender directly to see what temporary relief programs or policies they may have.

 

 

Rawpixel/istockphoto

 

Because student loans don’t disappear, it’s important to make them manageable. Borrowers with federal student loans may be able to qualify for deferment, forbearance, or income-based repayment options which can provide some temporary relief or help make monthly payments more manageable.

 

Options available for borrowers facing financial hardships with private student loans vary by lender.

 

 

DepositPhotos.com

 

For some borrowers, student loan refinancing can be a one way to lower interest rates, reduce monthly payments, and combine all your loans into a single monthly payment. Reducing monthly payments by extending the life of the loan may result in more interest over the life of the loan.

 

It’s also possible to refinance both federal or private loans, or a combination of the two. Note that refinancing federal loans eliminates them from federal protections, including relief options like deferment and forbearance, so this won’t be a suitable option for everyone.

 

Learn More:

This article
originally appeared on 
SoFi.comand was
syndicated by
MediaFeed.org.

 

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SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE  FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

 

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