The Pros and Cons of SBA Express Loans | Fora Financial Blog
The Pros and Cons of SBA Express Loans
March 26, 2019

The Pros and Cons of SBA Express Loans

Small Business Administration (SBA) Loans are a popular option for businesses that need quick financing. Unfortunately, many businesses struggle to secure financing through banks and other traditional sources, because these lenders think that small businesses come with too much risk. This is especially the case for startups, or business owners with low credit scores.

Due to this, the SBA offers a variety of loan programs, including Express Loans. These programs are designed specifically for businesses that are struggling to secure traditional business loans.

SBA Express Loans are a great resource for business owners, however, they come with some drawbacks. In this post, we’ll outline how this program works, and will review the pros and cons of receiving an SBA Express Loan.

What is an SBA Express Loan?

One of the SBA’s financing options is an Express Loan. The SBA understands that many business owners need financing quickly and can’t wait weeks (or even months) to find out their approval status. This is why they created this program. Once you submit your application, you could receive financing within 36 hours!

It’s important to note that Express Loans aren’t offered directly by the SBA. Instead, you’ll work with an approved lender and the SBA will guarantee a portion of the loan amount.

Should you default, the government will pay the lender the guaranteed amount. This lowers risks for lenders, allowing them to lend to higher risk borrowers. It’s important to note that lenders will use their own procedures and processes for evaluating and approving or denying loans.

SBA Express Loan Features:

  • Revolving lines of credit can have terms for up to seven years.
  • Interest rates are negotiated between borrowers and lenders.
  • Interest rates can be fixed or variable but can’t exceed the SBA’s guidelines.
  • Lenders may require collateral.

The Pros of SBA Express Loans

An SBA Express Loan will provide your business with additional working capital. This capital, in turn, can be used to buy equipment and materials, acquire a business, hire staff, invest in real estate, and grow your business.

Other SBA Express Loan Benefits:

  • Interest rates are relatively low for a business loan (between 9 and 11 percent).
  • The maximum loan amount is $350,000.
  • Long repayment terms are available.
  • Down payments are affordable.
  • Excellent for building business credit.
  • Quick approval, especially in comparison to other SBA loans.

The SBA will guarantee up to 50 percent of the SBA Express Loan. For lenders, this lowers risks substantially. Lenders can pass on these lower risks to borrowers, resulting in the above benefits.

The Cons of an SBA Express Loan

While SBA Express Loans are a great resource for small businesses, there are some drawbacks. One disadvantage is the high credit score requirement. Further, if you should default on an SBA loan, you may be barred from accessing government resources, such as other SBA loans, in the future.

Other SBA Express Loan Cons:

  • The Express Loan application process requires extensive paperwork.
  • Paperwork and application procedures will vary from bank to bank.
  • The wait time is still quite lengthy compared to other non-SBA lending options.
  • There are some restrictions on how the money is spent.
  • Depending on the lender, there may be applicable fees for applying, servicing, and late payments.


SBA Express Loans are a great option for small businesses, especially those that need immediate financing without high interest rates. They offer fair repayment terms, and funds are distributed quickly. In addition, loan There are also drawbacks, including strict eligibility requirements and an intensive application process.

Either way, SBA loans are far from the only option available. Even if your business is struggling to secure funding from traditional banks, you have other options, such as a merchant cash advance, business loan from a non-traditional lender, or credit cards.

Editor’s Note: This post was updated for accuracy and comprehensiveness in March 2019.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].