An Express Loan allows selected lenders such as National Penn Bank to utilize its own application, underwriting, and documentation in exchange for a 50% guarantee on their loans. This can significantly streamline the process. An Express Loan can be used for revolving Lines of Credit for working capital needs as well as term loans for other eligible purposes. The maximum loan amount is $350,000, although that may be temporarily increased by SBA at times.
SBA also charges a guaranty fee on Express Loans, and like the 7(a) Term Loan program, is based upon the loan amount and maturity. The guaranty fee for loans with a maturity of twelve months or less regardless of loan amount is .25% of the guaranteed portion. The guaranty fees for loans with a maturity of greater than one year are:
- Loans of $150,000 or less – 2% of the guaranteed portion
- Loans of $150,001 to $350,000 – 3% of the guaranteed portion
If SBA temporarily increases the maximum loan amount, the guaranty fee follows the same schedule as 7(a) Term Loans.
Additional fees may apply. Fees may be able to be paid from loan proceeds.
The interest rate is negotiated with the bank, and may be either fixed or floating, but generally may not exceed 4.5% over the prime lending rate regardless of maturity.
Collateral will include all business assets and may also include personal assets. Personal guarantees are required from any person owning 20% or more of the business and from any individual pledging personal assets.