SBA Express Loan Program
SESSION WILL COVER
• History
• Lender eligibility issues
• Program parameters
• Loan processing
• Loan closing
• Practical uses
www.sba.gov/for-lenders
• Increase lender participation
• Increase number of small loans
• Minimize SBA forms/procedures
• Expedite loan processing
• Standardize routine loans
• Attain centralized efficiency
• Reduce costs to lenders and SBA
Program Designed to:
What Does the Express Program Offer?
• Available for loans up to $350,000
• Lenders use own forms and procedures to
approve, service and liquidate
• Can be used for term loans or lines of credit
• 50% guaranty
• Higher guaranty allowed on loan up to
$500,000 if proceeds used to enter or expand
exports or loan is to a veteran owned
business
• Application
• Internal Credit Memoranda
• Note (Legally enforceable)
• Collateral Documents
• Liquidation Documents
Lenders Use Own Documents
for:
SBA Documents Limited to:
• Supplemental Information for Express Processing – Form 1920SX (Part B)
• Eligibility Information Checklist – Form 1920SX (Part C)
• Form 1919 - SBAExpress Borrower Information Form – Required for all guarantors and owners 20% or
more
– Lender retains forms in their file, DO NOT SEND to SBA
Lender Uses Own Procedures
• Same as for non-SBA loans
• Lender does credit analysis
• Lender screens for eligibility
• Lender uses own collateral policy
• Credit scoring is allowable
Eligibility Requirements
Use SBA Express Checklist
• Must be “small business” operated for profit
– # of employees or avg. receipts based on industry
– Find NAICS Code and size standard at www.sba.gov/size
• Owners must:
– Be of “good character”
– Be a citizen or documented alien – Meet SBA’s “personal resource test”
• Must be eligible type of business not engaged in lending, real-estate development, investments or speculation
• For Patriot Express loans SBC must:
– be 51% owned by an eligible military member – Provide VA or DOD documentation to lender
Loan Limits
• Aggregate amount of SBA portions for this
application and all outstanding loans to applicant and its affiliates can’t exceed $4.5mm
• Aggregate balance of all SBAExpress loans can’t exceed $350,000
– No piggyback loans
– Existing SBA loans need to be current
• Can be short-term or long-term and can revolve (includes credit cards)
Most legitimate business purposes:
• Purchase or renovate real estate
• Equipment, Inventory, Working Capital
• Buy an existing business*
• Refinance Debt*
• No payments/reimbursements to owners
*special requirements
Eligible Use of Proceeds
Requirements for Change of
Ownership
• Copy of Purchase and Sale Agreement required
• Business Valuation must be documented in file
• If lender prepared, must include synopsis with application
• If buyer and seller are related, must have independent valuation
• Seller must provide 3 years tax returns to be verified by IRS
• 100% change of ownership
www.sba.gov/for-lenders
Requirements for Debt Refinance
• Must provide a 10% overall improvement in
cash flow (exclude balloon payments, short-
term or interest only loans)
• Debt service on any one loan can not
increase
• May refinance lender’s own debt that has
been current for past 3 years, providing that
lender does not decrease their exposure
• Can’t refinance SBA loans
Collateral Requirements
• No collateral required on loans under
$25,000
• Over $25,000-up to $350,000: Lender to
follow own policies & procedures used
for non guaranteed loan portfolio
www.sba.gov/for-lenders
Interest Rate
• Interest rate maximums apply as an
overall effective rate not on individual
loans
– Maximum interest rates up to 6.5% over prime
for loans of $50,000 or less, and up to 4.5%
over prime for loans over $50,000
• Base rate can be established by lender (If
sold, must be published prime rate)
Special Requirement for Lines of Credit
Revolving Lines of Credit
• Maximum term 7 years, including revolving
and term out period
• Often done for 5 years revolving and 2 years
term out of balance
• Workouts may be termed out beyond 7 years
but not to exceed 3 additional years
• Can be on demand, but must have a stated
maturity
Lines of Credit (cont.)
• Can be renewable annually but must have
stated maturity – if renewing a 1 year
revolver, lender must pay additional
guaranty fee
• May be sold on secondary market
• May be credit card accessed, but lender
must ensure uses are all business related
• May be increased with SBA approval
What Fees are Involved?
• Regular guaranty fees apply
• Reminder – loans of $150,000 or less, lender can keep 25% of the guarantee fee (or pass savings along to
customer)
• Prepayment penalty for loans with maturity of 15 years or more
– During the 1st year – 5% of the prepayment amount – During the 2nd year – 3% of the prepayment amount – During the 3rd year – 1% of the prepayment amount
• On-going servicing fees apply – currently 0.55%
Patriot Express
• Maximum loan size $500,000
• 85% guaranty loans of $150,000 or less
• 75% guaranty loans over $150,000
• Business must be owned at least 51%
by an eligible military member or
spouse of the same
• May be used for lines of credit
Export Express
• Maximum loan size $500,000
• 90% guaranty loans of $350,000 or less
• 75% guaranty loans over $350,000
• Business must use the loan to enter
export markets or expand exporting
• May be used as a line of credit
How to submit electronically
• All SBA Express Lenders are required to use E-Tran
• Can use commercially available software or in-house designed process
• Takes experienced lender about 15 minutes to complete the data entry
• Lender receives loan number within seconds of submitting their request
• no forms or paperwork sent to SBA
Closing Requirements
• Lender uses own policies & procedures to close and disburse
• Note must be legally enforceable & assignable w/ stated maturity
– Statement that proceeds only used for business purposes
• Draft and follow Authorization
• IRS Verification
• Hazard & Life insurance based on normal requirements
• Flood search, if required
• Environmental reviews, if required
• Do not send closing documentation to SBA
Questions?
Thank You!
Amy Bassett, Deputy District Director (603) 225-1606
