BLOG: SBA 7(a) Loans — SBA Express Loan & Patriot Express Loan

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With the SBA Express loan and the Patriot Express Loan lenders can use, to the maximum extent possible, their own loan analyses, procedures and documentation, in addition to their own application forms, internal credit memoranda, notes, collateral documents, servicing documentation and liquidation documentation. In return for the expanded authority and autonomy provided by the program, lenders agree to accept a maximum SBA guaranty of 50 percent (85 percent for Patriot Express).

Key Benefits

Some of the key benefits to the SBA Express Loan include:

• Reduced SBA eligibility documentation requirements

• Ability to use business assets as collateral; real estate may be necessary

• Accelerated processing with conventional loan documentation

• Longer loan terms

Loans made under this program generally follow SBA’s standards for the 7(a) Loan Program.  However, the SBA Express features an accelerated turnaround time for SBA review; a response to an application will be given within 36 hours.

Details of the Express Loan

Maximum Loan Amount:  $350,000 (See SBA's Oct. 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).  Rates 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 and borrower information

Collateral:  Lenders are not required to take collateral for loans up to $25,000.  They may use their existing collateral policy for loans over $25,000 and 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

The Patriot Express Loan

ThePatriot Express Loan allows lenders with Patriot Express authority to make offers similar to lenders with SBA Express authority, but the business owner is more limited. To be eligible to receive a Patriot Express Loan, the business must be owned and controlled (51 percent or more) by eligible veterans and members of the military community who want to establish or expand a small business.

Eligibility Requirements for the Patriot Express Loan

Eligible military community members include:

• Veterans

• Service-disabled veterans

• Active-duty service members eligible for the military’s Transition Assistance Program

• Reservists and National Guards

• Current spouses of any of the above, including any service member

• Widowed spouses of service members or veterans who died during service or of a service-connected disability

Details of the Patriot Express Loan

Maximum Loan Amount:  $500,000

Maximum SBA Guaranty:  Follows SBA standard 7(a) guarantee percentages

Interest Rate:    Rate may be fixed or variable; lenders and borrowers can negotiate interest rate, but lenders may not charge more than 2.25% over prime rate for loans of less than seven years and 2.75% over prime for loans greater than seven years; lenders may charge 1% more for loans of $50,000 or less and 2% more for loans of $25,000 or less.

Eligibility Decision: Must meet standard SBA 7(a) loan eligibility and must be 51% or more owned/controlled by Veteran (other than dishonorably discharged); active duty military: potential retiree within 24 months of separation and discharging active duty member within 12 months of discharge (TAP eligible); Reservist and National Guard; current spouse of above or spouse of service member or veteran who died of a service-connected disability.

Revolving Lines of Credit:  Up to seven years with maturity extensions permitted at the outset

SBA Turnaround Time:  Within 36 hours

Forms:  Streamlined:  Lender primarily uses own forms and procedures

Collateral:  Lenders are not required to take collateral for loans up to $25,000.  They may use their existing collateral policy for loans over $25,000 and 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

 

**Veteran Tip — Is the Patriot Express Loan right for you?

While the Patriot Express Loan offers an extremely fast turnaround, it also usually comes with a higher interest rate.  Depending on the time frame and the loan amount, you should consider applying first for the 7(a) basic loan.   Your local SBA representative can help you decide which program is best for you and your business.

For More Information

For more information, contact your local SBA District Office.

References

http://www.sba.gov/content/sba-express

http://www.sba.gov/content/patriot-express