How Long Does It Take To Get An SBA Loan?

The SBA loan process requires time and patience; potential borrowers must go through many steps of paperwork and vetting. Exactly how long do SBA loans take to process? With typical SBA lenders, the SBA loan disbursement process takes two to three months. Some SBA lenders offer funding in as little as 30 days, although this is quite rare. Read on to find out how long you may have to wait and how to speed up your SBA loan approval time, as well as faster SBA loan alternatives.

SBA Loan Processing Time

The expected SBA loan approval time varies, depending on the type of loan you are applying for. Learn more about the SBA 7(a), SBA 504, SBA microloan, and SBA disaster loan disbursement schedule:

What About SBA Express Loans?

Are SBA Express loans actually faster than regular SBA loans?

In short, yes. The downside is that, while the SBA Express loan approval time is much quicker than other SBA loans, the maximum loan amount is low at $350,000. The Express loan is typically approved by the SBA within 36 hours, making it the fastest SBA loan disbursement. However, the approval from the partnered bank could take several weeks, which means that the total time to funding could still be one to two months, depending on the lender. Still, this is at least a month faster than most other SBA loans.

As with other SBA loans, you will also need to prepare a comprehensive loan application package to apply for the Express loan. This process, of course, will take some time, though Express loans require fewer documents compared to a 7(a) loan. Required forms for an Express loan include a Borrower Information Form and a Statement of Personal History. If more than $10,000 in loan funds will be used for construction, you’ll also need to fill out an Agreement of Compliance. The Express loan’s issuing bank should provide direction on how to put together the application package and help you work through the process as needed.

Another thing to know about Express loans is that because the SBA backs only 50% of an Express loan (compared to 75%-85% of a traditional 7(a) loan), interest rates on Express loans tend to be somewhat higher.

Why SBA Loans Take So Long: The SBA Loan Timeline

When applying for an SBA loan, know that you’ll need to be patient. Most of these loans require a lot of documentation and verification, which makes the SBA loan application process quite lengthy.

If you’re applying for a 504 loan, your application will be roughly thirteen pages long. You’ll need information on project costs, energy efficiency goals, debenture pricing, and more. Because the 504 loan is a dual-approval process, it can take even longer. Your completed application will be submitted to the CDC, which will then assess the application and forward it to an SBA Loan Processing Center.

Other SBA loans have similar processes in which a potential borrower must fill out an online form describing the business’s needs. From there, the SBA will match you with possible lenders with whom you can discuss SBA loan rates and terms and formally apply for their loan.

These in-depth applications do take time to fill out. Once the application is completed, the documents must be reviewed by multiple sets of eyes, which makes the waiting periods lengthy.

First Step: Putting Together An SBA Loan Application Package

Here are some items you will need in your SBA Loan Application Package:

• Business Plan: Your lender wants to see concrete evidence that your business will be able to pay back the loan. You can show this by including:
  • A description of your small business, including information on your product/service
  • Plans for your business
  • An outline of your team
• Statement Of Purpose: This is your opportunity to tell the SBA what you intend to do with any funding you receive. You will need:
  • A statement on how the loan will benefit your business
  • An explanation of how you, as a business owner, have invested your personal resources into the business
  • Any other information you have about your loan request
• Financial Statements: Here’s where you can show the lender that the numbers are in your favor. To demonstrate that you are financially capable, you will need:
  • Personal Financial Statements: personal net worth, debts
  • Cash Flow Statements: income, expenses
  • Income Statements: profit, loss
  • Balance Sheets: business value and/or net worth

Next Step: Underwriting

Formal underwriting for an SBA loan usually takes about two to three weeks. This time allows either your underwriting team or loan officer to discuss any questions or concerns they may have about your loan. During this time, you may be asked to participate in more meetings to discuss your plans or even to fill out more paperwork. The underwriting period can take longer if the SBA requests extra documentation.

Final Step: SBA Loan Disbursement Process

Once you’ve been approved, it generally takes funds about five days to reach your account. The timeframe can vary depending on the type of loan and your particular case. Be sure to ask your lender how long it takes for approved funds to get disbursed.

How SBA Loan Processing Timeline Compares To Other Business Loans

We’ve established that SBA loans can take up to 90 days or longer to be approved and released to small businesses.

In comparison to other business loans, this is quite a lengthy process. When applying for a traditional business loan at a bank, you can expect to get funded within only two to four weeks. An even faster option is an online business loan. Online resources, although more expensive than an SBA or a bank loan, boast short applications that take minutes and can provide funding within as little as 24 hours.

The appeal of an SBA loan, of course, is not that it is quick or simple but that it is guaranteed in amounts up to 85%, and often offers low rates and long terms.

If the loan amount matters more to you than speed, it’s important to note that the average business loan is usually a lot smaller than the stated maximum borrowing amount. Federal Reserve data (as compiled by Bankrate) shows that the average SBA loan is $107,000, compared to $593,000 for a business loan from a large national bank, or $146,000 from a smaller regional bank. The average alternative online loan is $50,000 to $80,000. And the average SBA Microloan (per the SBA’s Microloan information page) is just $13,000. Of course, the amount you’re ultimately approved for will depend heavily on your business credentials.

Is It Worth Waiting Out The SBA Loan Process?

This depends entirely on how fast you need the money.

If it’s an emergency and you need funds in less than three months, or your business will not survive, then the long SBA loan approval time will probably be a dealbreaker. Instead, you should seek out an alternative loan—such as a short-term loan. However, if you can reasonably wait up to a few months to get funded, then it is absolutely worth waiting for an SBA loan. You won’t be able to get as good of a rate outside of the SBA.

Two Ways To Get An SBA Loan If You Need Cash Now

If you decide to proceed with an SBA loan, but still want to get your cash as soon as possible, be sure to fill out your SBA paperwork and preliminary applications as accurately and completely as you are able. This is your best bet for getting a fast response from the SBA. The less the SBA has to do to get information from you, the better your experience will be.

Of course, a speedy SBA loan approval time is never a guarantee, even if you do have all your documents in order. If you truly need to know your funds will be here sooner than later, you can check out the following resources for small business owners.

1. Apply For An SBA Loan Online Through SmartBiz

SmartBiz is an online resource that uses technology to speed up the SBA loan application process so that you receive your SBA loan in about two to six weeks from application to funding. You can think of it as a hybrid online loan/SBA loan. By applying online, much of the cost, time, effort, and paperwork of the traditional SBA loan application process are eliminated. SmartBiz can also help you determine if you have a good chance of qualifying for a loan before you fill out a full application, saving even more time.

2. Get A Bridge Loan

A bridge loan is a transitory, short-term loan that your small business can use until all of your needed funding comes in from other sources. If you’re looking for a temporary bridge loan (without a prepayment penalty), check out the best small business loans based on our research.

FAQs About SBA Loan Process & Approval Time

What Happens After SBA Loan Is Approved?

You went through the entire SBA loan process, from application to underwriting, and your loan has finally been approved. So how long does it take to get the SBA loan once it’s approved? Your SBA loan should hit your bank account about five days after approval. (For comparison, PPP loans took up to 10 days.)

SBA Loan Approval Time & Disbursement Process: Key Takeaways

While the SBA loan process does take a bit longer than traditional and online business loan applications, SBA loans do have their positive qualities, some of which include low-interest rates and long repayment terms. If you think an SBA loan is right for you, begin the application process before you need cash. This way, the potentially lengthy SBA loan processing timeline won’t be a hindrance to you. Most importantly, be sure to look into all your options before deciding on what is best for your small business.

If you need a faster small business loan than what the SBA can provide, some other options to consider might include business loans for bad credit or a business line of credit.