The SBAExpress Guaranty is Available to Lenders as a Way to Obtain A Guaranty on Smaller Loans up to $350,000 for Small Businesses.

SBAExpress

The SBAExpress guaranty is available to lenders as a way to obtain a guaranty on smaller loans up to $350,000.  The program authorizes select, experienced lenders to use mostly their own forms, analysis and procedures to process, service and disburse SBA-guaranteed loans.  The SBA guarantees up to 50 percent of a SBAExpress loan.  Loans under $25,000 do not require collateral.  The use of loan proceeds is the same as for any basic 7(a) loan.   Like most 7(a) loans, maturities are usually five to seven years for working capital and up to 25 years for real estate or equipment.  Revolving lines of credit are allowed for a maximum of seven years.

SBAExpress features an accelerated turnaround time for SBA review; a response to an application will be given within 36 hours.

About the Program

Maximum Loan Amount:	$350,000 (See SBA's October 8, 2010 press release for more information about the temporary increase to $1,000,000)
Maximum SBA Guaranty %:	50%
Interest Rate:	Lenders and borrowers can negotiate the interest rate. Rates can be fixed or variable and are tied to the prime rate (as published in The Wall Street Journal), LIBOR, or the optional peg rate (published quarterly in the Federal Register) and may be fixed or variable, but they may not exceed SBA maximums: lenders may charge up to 6.5 % over the base rate for loans of $50,000 or less, and up to 4.5 % over for loans over $50,000.
Eligibility Decision:	By SBA; qualified lenders may be granted authorization to make eligibility determinations.
Revolving Lines of Credit:	Up to seven years with maturity extensions permitted at the outset.
SBA Turnaround Time:	Within 36 hours
Forms:	Lender primarily uses own forms and procedures, plus SBA Form 1919, Borrower Information.
Collateral:	Lenders are not required to take collateral for loans up to $25,000; may use their existing collateral policy for loans over $25,000 up to $350,000.
Credit Decision:	By lender.
Purchase:	May request expedited SBA purchase on small loans or in situations where liquidation may be delayed.

Loans made under this program generally follow SBA’s standards for the 7(a) Loan Program.

Eligibility

A lender may be eligible to participate in SBAExpress if:

• It is currently an SBA partner lender and meets certain portfolio performance standards.
• There are no minimum SBA loan volume requirements to begin making SBAExpress loans.
• It is currently a non-SBA lender that makes a reasonable number of commercial loans of $50,000 or less.

For More Information- See News Release below

SBA Implements Higher Maximum Loan Sizes Made Possible by Small Business Jobs Act

Release Date: 

WASHINGTON – On the heels of completing final approvals of loans to nearly 2,000 firms that has been in its loan queue waiting for final approval of the Small Business Jobs Act, the U.S. Small Business Administration has finished implementation of another major element of the bill: increasing maximum sizes in several of its loan programs.

The changes – effective today – are permanent for general small business loans under SBA’s 7(a) guaranteed loan program, fixed asset loans through the 504 Certified Development Company program, Microloans, and International Trade, Export Working Capital and Export Express loans. A temporary increase for SBA Express loans is good for one year.

“Across the country, there are small businesses owners who are in a position to take that next step to grow and create jobs, and these larger loan sizes provide another tool to help them do just that,” SBA Administrator Karen Mills said. “Whether they’re in the start-up phase and could use a microloan or are looking to take advantage of lower real estate prices and interest rates to buy a new building to expand, SBA loans can now be an even greater resource to help entrepreneurs and small business owners get the capital they need.

“Additionally, temporarily increasing the cap on SBA Express loans from $350,000 to $1 million will allow more small businesses to take advantage of the streamlined approval process for working lines of credit and other capital they need,” Mills said.

Under the Jobs Act provisions, SBA has permanently increased 7(a) and 504 limits from $2 million to $5 million, and for manufacturers and certain energy-related projects seeking 504 loans, to $5.5 million. The maximum for International Trade and Export Working Capital loans also has been increased from $2 million to $5 million.

SBA also permanently increased microloan limits from $35,000 to $50,000, helping larger entrepreneurs with start-up costs and small business owners in underserved communities. It also raised the limit on Export Express loans, from $250,000 to $500,000, and made the program permanent.

SBA Express loan limits have been temporarily raised from $350,000 to $1 million for one year. These loans offer a streamlined application process with reduced paperwork and approval often in a matter of days. Unlike traditional 7(a) loans, SBA Express loans carry a 50 percent guarantee and can be used as revolving lines of credit – to help restock inventories and support larger revenue sales – which are particularly critical for small businesses as they emerge out of the recession.

SBA’s own trends show increasing demand for larger loans. The percentage of lending volume for guaranteed loans greater than $1.5 million has grown, from 13 percent of total dollars approved in fiscal year 2005 to 21 percent in fiscal year 2010, with many loans actually at the $2 million maximum. In the 504 program, the percentage of loan volume committed to loans greater than $1.5 million also has grown, from 15 percent of total dollars approved in fiscal year 2005 to 25 percent in fiscal year 2010.

SBA has already put in place the alternate size standard that expands eligibility for SBA-backed loans that was included in the Jobs Act, increasing the alternate size standard to include those small businesses with less than $15 million in net worth and $5 million in average net income.

Additionally, Administrator Mills announced on Tuesday that all loan applications placed in the SBA’s loan queue by small business borrowers had received final approval, amounting to 1,939 loans for nearly $970 million. The loans were able to make use of loan guarantees up to 90 percent and reduced fees extended under the Jobs Act. Many of the loans had been in the queue waiting for the extension since May.

The bill provided the agency with enough funding to support an estimated $14 billion in lending to small businesses with the extension of higher guarantees and reduced fees in the top two loan programs, first implemented as part of the American Recovery and Reinvestment Act of 2009.

The Jobs Act also includes additional resources to help increase lending to small businesses, including the State Small Business Credit Initiative announced today by the Department of Treasury that will support $15 billion in lending through local programs and the Small Business Lending Fund, which will provide capital to local, community banks to increase their lending to small businesses.

Additionally, the new law contains $12 billion in tax credits targeted to small businesses, including higher deductions for investing in new machines and equipment, zero capital gains for those who buy and hold small business stocks for five years, and a doubling of the maximum deduction for startups to $10,000. It also allows self-employed Americans to completely deduct health insurance costs for themselves and their families.

Friday, October 8, 2010

Release Number: 

10-59

Contact: 

Mike Stamler (202) 205-6919

Internet Address: 

http://www.sba.gov/news

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Source: sba.gov