Express SBA No-Doc Loans
This guide will cover Express SBA No-Doc Loans for small business owners. If you are a small business owner looking for a quick and simple way to get funding for your business needs, you may have heard of Express SBA No-Doc Loans. Lending Network, LLC is a one-stop commercial and business lending shop that can do business in all 50 states:
Express SBA No-Doc Loans are partially guaranteed by the U.S. Small Business Administration (SBA) and issued by approved lenders but with less documentation and faster approval times than other SBA loans.
Express SBA No-Doc Loans are called “no-doc” because they do not require the same paperwork and financial statements as other 7(a) loans. Instead, lenders can use their forms and procedures to evaluate borrowers’ eligibility and creditworthiness. This makes the application process easier and faster for both borrowers and lenders. The following sections will cover Express SBA No-Doc Loans for small business owners.
What are Express SBA No-Doc Loans?
Express SBA No-Doc Loans are SBA loans that fall under the 7(a) program, the most popular and flexible loan program offered by the SBA. The 7(a) program provides loans for various business purposes, such as working capital, inventory, equipment, real estate, debt refinancing, and business acquisition.
Unlike other 7(a) loans, Express SBA No-Doc Loans have lower borrowing limits and faster processing times. The maximum loan amount for Express SBA No-Doc Loans is $500,000, compared to $5 million for standard 7(a) loans.
The SBA also promises to respond to Express SBA No-Doc Loan applications within 36 hours, while standard 7(a) loans may take weeks or months to process. Another difference between Express SBA No-Doc Loans and other 7(a) loans is the required documentation.
How Do Express SBA No-Doc Loans Work?
Express SBA No-Doc Loans work similarly to other 7(a) loans in terms of interest rates, fees, repayment terms, and collateral requirements. However, there are some variations depending on the size of the loan and the type of lender.
One great benefit of Express SBA No-Doc Loans is borrowers have flexible options on how they can use the proceeds of the loan unlike other business loan programs.
Express SBA No-Doc Loans can be used for various business purposes, such as working capital, equipment, real estate, debt refinancing, and business acquisition. This can help borrowers meet their specific business needs and goals.
Interest Rates on Express SBA No-Doc Loans
Lenders determine the interest rates for Express SBA No-Doc Loans but must adhere to SBA maximums. For loans that amount to $50,000 or less, the interest rate cannot exceed the prime rate plus 6.5%.
SBA No-Doc Express Loans have lower rates and fees than most other business loans, especially for smaller loan amounts. This can help borrowers save money and reduce their debt burden.
For loans of $50,001 to $250,000, the interest rate cannot exceed the prime rate plus 6%. For loans of $250,001 to $350,000, the interest rate cannot be more than the prime rate plus 4.5%. For loans of $350,001 or more, the interest rate cannot be more than the prime rate plus 3%. Banks apply the prime rate as the interest rate for customers with the highest creditworthiness.
Fees on SBA No-Doc Express Loans
The Express SBA No-Doc Loans fees include a one-time guarantee fee that varies based on the loan size. The lender pays the guarantee fee to the SBA for backing a portion of the loan in case of default.
The guarantee fee ranges from 2% to 3.75% of the guaranteed amount of the loan.
The guarantee fees of The Express No-Doc loans have been waived for the 2023 fiscal year, which ends in September. Additionally, guarantee fees are always waived for eligible veteran-owned businesses. Lenders may also charge additional fees for packaging and servicing the loan.
Repayment terms of Express No-Doc SBA Loans
The repayment terms for SBA Express No-Doc Loans depend on the type and purpose of the loan. For term loans used for working capital, equipment, or inventory purchases, the repayment term can be up to 10 years. When using term loans to purchase real estate, the borrower can repay the loan for up to 25 years. For revolving lines of credit, which enable the borrower to withdraw funds as required within a specific limit, the repayment period can extend up to 10 years.
Collateral Requirements on Express SBA Loans
The collateral requirements for Express SBA No-Doc Loans vary depending on the size of the loan and the lender’s policies. For loans of $50,000 or less, lenders are not required to take collateral from borrowers. For loans over $50,000, lenders should follow their policies for similarly-sized non-SBA commercial loans. Collateral can include business assets such as equipment, inventory, accounts receivable, or real estate.
What Are The Benefits of SBA No-Doc Loans?
Express SBA No-Doc Loans have several advantages and disadvantages compared to other types of business financing. Here are some of them. Express SBA No-Doc Loans have faster approval and funding turnaround times.
Express SBA No-Doc Loans can be approved within 36 hours by the SBA and funded within days or weeks by the lender. Fast processing and closing can help borrowers access capital quickly when needed.
Express SBA No-Doc Loans require less documentation. Express SBA No-Doc Loans do not require as much paperwork and financial statements as other SBA loans. This can save time and hassle for borrowers and lenders: competitive interest rates and fees.
Drawbacks of Express No-Doc Loans
Lower borrowing limits: Express SBA No-Doc Loans have a maximum loan amount of $500,000, which may not be enough for some borrowers who need more funding for their business. Lower SBA guarantee: Express SBA No-Doc Loans have a lower SBA guarantee than other 7(a) loans.
Express SBA No-Doc Loans are guaranteed by the SBA up to 50% of the loan amount, whereas standard 7(a) loans are guaranteed up to 85%. This means lenders may have more risk and less incentive to lend to borrowers with Express SBA No-Doc Loans.
Collateral requirement: SBA No-Doc Loans may require collateral for loans over $50,000, depending on the lender’s policies. This means that borrowers may have to pledge their business or personal assets as security for the loan, which can put them at risk of losing them in case of default.
Is Getting Express SBA No-Doc Loans a Good Idea?
SBA No-Doc Loans are a fast and easy way to finance your small business needs. They offer competitive interest rates and fees, flexible repayment terms, and less documentation than other SBA loans. However, they also have lower borrowing limits, SBA guarantees, and collateral requirements that may only suit some borrowers. Therefore, you should compare options and weigh the pros and cons before applying for an SBA No-Doc Loan.
