The SBA’s Community Express Loan Program (Unsecured Loans)
What is the SBA Community Express Loan Program?
Through the Community Express Loan Program (part of the 7(a) loan program), the SBA lenders provide unsecured loans (up to $25,000) to eligible small businesses nationwide.
What is an Unsecured Loan?
Unlike like 7(a) loans, an unsecured loan is one that is not backed by collateral or assets. Often, collateral can be real estate, equipment, inventory that a business owns or a loan can be secured against the personal assets of a business owner.
Who should apply/is eligible for a Community Express Loan?
Here are some general eligibility requirements:
- Start-up businesses
- Working capital loans to businesses after acquisition has been fully completed are permitted
- Franchise must be on the SBA approved Franchise Registry www.franchiseregistry.com
- Have been current in filing SBA required 1502 reports and in remitting required guaranty and servicing fees
- Have at least an 85 percent currency rate on its SBA 7(a) loan portfolio for the last three complete fiscal years
- Can effectively process, close, service, and liquidate SBA loans
Who is ineligible for a Community Express Loan?
Here are some types of businesses that should not apply for a Community Express loan:
- Non-profit businesses
- Agricultural and farm businesses
- Fishing and shore operations (including commercial fishing activities and the construction of new fishing vessels)
- Medical facilities (including residential care facilities)
- Mines (including sand and gravel pits)
- Applicants doing business in foreign countries
- Businesses engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting
- A business with any products or services of a sexual nature
- Investment Real Estate – apartments, rental housing, or multi-tenant buildings
- Speculative Real Estate
- A business that is engaged in lending (Mortgage Brokers are OK)
- A business that is engaged in gambling
What are the Community Express Loan interest rates/terms/fees?
The interest rates follow the standard SBA rates: The rate is generally within 2%-2.75%, however it may increase or decrease depending on the loan size and the maturity terms.
The maximum loan under this program is $250,000 and no collateral is necessary for a loan under $25,000.
Lenders must provide borrowers with at least one year of technical assistance.
What is the application process for a Community Express Loan?
To apply for a Community Express Loan, keep in mind the following process elements and guidelines:
- Application must submitted by Technical Assistance (T/A) Provider or applicant directly to the lender
- Upon approval of loan a commitment letter is issued and closing documents are sent to the Technical Assistance Provider and/or Borrower
- Signed commitment letter and closing documents should then be returned to the Community Express Loan division of the lender
- Funding occurs after the Community Express Loan division receives the Technical Assistance certificate with business plan attached from the Technical Assistance Provider