SBA Express Loan Program: 4 Disadvantages

With an SBA Express Loan borrowers have a number of ways that they could benefit. The SBA has several loan programs available, but the Express program is one of the more beneficial ones. With the Express program, you will be able to receive a decision on your loan within 36 hours. While there are some benefits to this type of loan, the program is not without some disadvantages as well. Here are a few disadvantages of the SBA Express Loan Program.

1. Loan Maximums

With this type of program, there are limits to what you can borrow, regardless of personal circumstances. With traditional loans, the amount of the loan is determined by your income and personal credit. With this loan program, the maximum amount that they can lend is $350,000. While that might be sufficient for certain people, other circumstances call for more. Buying property or constructing a building will usually cost more than $350,000. This means that you will have to get a secondary source of funds for certain projects. Dealing with more loans can be a nuisance. 

2. Only 50% Guaranteed

With the SBA Express Loan Program, the SBA is only going to guarantee up to a maximum of 50% of the loan. When the SBA is only backing part of the loan, this means that the lender is going to have to stand behind the rest of the loan. This can make it harder to get approved if your credit is not favorable. You want the SBA to guarantee as much of the loan as possible. This makes it easier for you to get approved. However, with this program, they are only guaranteeing half. 

3. Rush into a Decision

While sometimes a fast approval process is beneficial, it could actually be a negative aspect in some circumstances. When you are making a big consideration like whether or not to go forward with a loan, rushing into a decision is not always in your best interests. This is going to be a decision that shapes a big part of your financial future. This means that you need to put some serious thought into the decision. If you only have two or three days before your loan is approved, you might rush into something that does not make sense for you. 

4. Lender Makes Decision

With the SBA Express Loan program, you have to worry about whether the lender approves you for the loan. Just because you are working with the SBA does not mean that you will be approved for the loan that you need. Therefore, you are still at the mercy of the bank you choose to work with.