What’s an SBA Express Bridge Loan?

May 15, 2020 : H&R Block

There are a lot of coronavirus economic recovery options right now for small businesses. But it can be challenging to figure out which ones are right for you and your company.

One option you might have heard about is an Express Bridge Loan (EBL). Here’s what you need to know.

What’s an EBL?Man figuring out SBA express bridge loan

The EBL pilot program was set up in 2017 by the U.S. Small Business Administration (SBA) to help small businesses get through presidentially declared disasters with SBA loans. On March 25, 2020, the program was expanded to allow small businesses that have been adversely impacted by COVID-19 to access these loans.

This program is a supplement to the SBA’s current disaster loan program. But EBLs stand out in one big way: they’re designed to get you the money quickly. Otherwise, it’s a fairly standard SBA loan.

The most important things to know about the EBL:

  • Only small businesses can apply, and you must use the loan to keep your business afloat or to reopen it.
  • The loan is for up to $25,000, with a max loan term of seven years.
  • You must apply before March 13, 2021.
  • You can repay it fully or partially using an Economic Injury Disaster Loan (EIDL). Think of an EBL as an advance on an EIDL, if you decide to get that loan as well.
  • You can only have one EBL per business.
  • Having an EBL doesn’t stop you from getting other loans from the SBA.

As for fees and interest rates, here’s what you’ll want to look out for with an EBL:

  • The max interest rate your lender can charge is currently 9.75%. This number can change, but it will always be the prime interest rate + 6.5%.
  • The application fee is either $250 or 2% of your loan, whichever is more.
  • Late payment fees can’t be more than 5% of what you’re scheduled to pay.

Do you qualify for an SBA Express Bridge Loan?

Already work with an SBA express lender? As long as your small business had a relationship with the lender before March 13, 2020, you can explore getting an EBL. Businesses can document a relationship with a lender using a current bank statement, existing note, or other official banking document with the business’s address.

Unfortunately, if you don’t already have a banking relationship with an SBA express lender, you can’t apply for an EBL. There are still plenty of other options available to you, though. Our list of small business tax resources for coronavirus can suggest what else you can do to help your business.

How to apply for an SBA Express Bridge Loan

As with any loan, there are some details you should know about before applying. To get approval for an Express Bridge Loan, you’ll need to:

  • Have a Small Business Scoring Service (SBSS) score of at least 130 (though this number might change in the future).
  • Submit IRS Form 4506-T to the IRS to get the business’s tax transcript. Then submit that transcript to the lender.
  • Check your personal credit score for errors, as the lender will check your credit score.
  • Meet all standard SBA 7(a) loan qualifications.

To apply, contact your lender to see if they’re offering Express Bridge Loans, or check out this list of lenders from the SBA. Your lender will also be able to give you the forms you need to apply.

What if you don’t qualify for an EBL?

If an EBL doesn’t work out for your business, we have tax experts ready to help. You can schedule a consultation with one of our small business specialists to craft a recovery action plan that’s right for you.

Getting help beyond SBA Express Bridge Loans

Just want to see what other opportunities are out there? We’ve compiled info about tax and finance support for small businesses into our small business tax resources for coronavirus page. There, you can find out about loans, programs, and tax implications for small businesses and COVID-19.

No matter where you get your help, all of us at H&R Block are wishing you the best. We know how important small businesses are to our communities everywhere, so we’re here to help guide you on the road ahead.

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