With PPP Shuttered, SBA Express is Lenders' Next Big Opportunity

Meghan Parnell

Meghan Parnell

June 11, 2021


For lenders, the premise behind the Small Business Administration’s 7(a) program has always been to allow them to make a loan that in some way, shape, or form falls outside of their standard credit policy, but wouldn't necessarily be classified as a straight out decline.

Sometimes that can be an otherwise well-qualified business with a collateral shortfall. Sometimes it’s a borrower that wants a longer maturity than the lender’s credit policy allows. Sometimes it’s a startup or a relatively new business and, although the lender does not typically lend to startups or new businesses, they feel there are mitigating factors, like strong owner credit and overall financial strength, or the owner’s experience in the industry, that help offset the risk inherent in lending to a startup or recently established business.

The SBA 7(a) program helps lenders extend much needed capital to businesses under scenarios like these, where it wouldn’t be available otherwise.

Products offered under SBA’s 7(a) program are vast and include SBA Express, 7(a) Small Loans, and Standard 7(a) Loans and CapLines, among others. SBA Express is a great option for lenders. It encompasses both term loans and lines of credit, and allows all SBA lenders to approve under delegated authority--regardless of whether or not they have Preferred Lender status. The SBA Express program allows the lender to use their own credit policies to underwrite and approve loans, the same ones they use on their similarly sized non-SBA loans, and reduces the amount of time and resources that it takes to get an SBA loan across the finish line.

Prior to the COVID-19 pandemic, SBA Express loans were capped at $350,000 and the guarantee percentage provided by SBA was 50 percent. As the government tries to stimulate recovery, the cap on SBA Express loans has been temporarily increased to $1 million through Sept. 30, 2021. Additionally, the guarantee percentage provided by SBA was also increased on loans up to $350,000, from 50 percent to 75 percent.

On Oct. 1, 2021, the SBA Express loan cap will be set at $500,000 indefinitely, an increase over the previous cap of $350,000, and the guarantee percentage provided by SBA under the Express program will revert to 50 percent.

For banks and credit unions, the opportunity is clear. Just as demand for SBA loans is likely to spike, the administration has provided more flexibility to lenders in offering products supported under the SBA Express program. Additionally, in a time where lenders will be hyper-focused on managing risk when making loan decisions, and struggling to lend within their credit policies, SBA has stepped up to share the risk with lenders even more than they did before.

To get the most out of this opportunity, banks and credit unions will need to be efficient and able to handle potentially high application volumes.

Leveraging the Numerated digital lending platform can help make SBA Express lending faster and easier for lenders and their borrowers, allowing institutions to free up valuable resources.

With the Numerated digital lending platform business customers can apply via a self-service portal, or with the assistance of a trusted banker. Our SBA Express solution simplifies complicated 1919 borrower forms, 1920 lender forms, and 4506-C tax forms, pre-populating data the bank already has available, making typically tedious applications easy to complete. Upon approval, all documentation associated with the application and closing are circulated for signature and bank countersignature in DocuSign.

By leveraging the Numerated digital lending platform, banks and credit unions can minimize the time it takes to start, submit, and process an SBA Express application.

To learn more about the SBA Express opportunity, watch our platform demo here.

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