How Long Does It Take To Get An SBA Loan Approved?
Wondering what the turnaround time is for an SBA loan?
With typical lenders, the process of receiving an SBA loan takes up to 2-3 months. Some lenders will offer funding in as little as 30 days, although these efficient lenders are quite rare. The process requires patience; potential borrowers must go through many steps of paperwork and vetting. You will need to prepare all necessary documents, meet with a lender, complete more documents, wait on underwriting, and finally wait for closing.
The more exact and correct you can be in your preliminary applications, the better chance you have of getting a faster response from the SBA. Most importantly, be prepared to wait, and don’t be surprised if you aren’t regularly updated on the status of your application.
Read on to find out how long you may have to wait and how to speed up the process!
Table of Contents
SBA Loan Approval Time
SBA 7(a) Loan Approval Time
An SBA 7(a) Loan usually takes about 2-3 months to be approved. If you have the option of working with an SBA Preferred lender, your application may be approved much faster, comparatively. Of course, the exact time it will take to be approved depends highly on you and your lender.
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| Borrower requirements for SBA 7(a) loan: • In business at least 2 years • Owner’s personal credit score is 650 or above • Business credit score is 150 or above | |
| Visit the SmartBiz website Read our full review | |
SBA 504 Loan Approval Time
As with other loans, the time allotted for SBA 504 Loans vary drastically. On average, the loans take around 30–45 days from application to funding. Approval time can, however, take anywhere from 1–6 months. Because the 504 lending program is a dual-approval loan involving both a CDC and the SBA, there are more variables to consider. The timeline relies heavily on the borrower and their specific needs.
SBA Microloan Approval Time
SBA Microloans are given in smaller amounts, so the process can be somewhat shorter. Receiving a Microloan can take an average of 4 weeks or more. Your application must be approved by both an intermediary lender and the SBA, so patience is key when waiting on a Microloan.
SBA Disaster Loan Approval Time
Receiving an SBA Disaster Loan is a three-step process: Application, Property Verification & Loan Processing Decision, and Loan Closing & Disbursement of Funds. The SBA states that the first and second step takes an average of 4 weeks. Step 3 takes around 5 days for borrowers to receive funds.
What About SBA Express Loans?
Are Express loans actually faster than regular SBA loans? In short, yes. The downside is that, while the processing time is much quicker than other SBA loans, the maximum loan amount is low at $350,000. The Express Loan can be approved within 36 hours, making it the fastest SBA loan application process.
Why SBA Loans Take So Long: The SBA Loan Application Process
When applying for an SBA loan, know that you’ll need to be patient. Most SBA loans will require a lot of documentation and verification, which makes the 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 cost, 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 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 potential lenders with whom you can discuss 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.
- Future 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 show 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 2–3 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: Approval & Loan Disbursement
Once you’ve been approved, it generally takes funds about 5 days to reach your account. This 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 be disbursed.
How Does SBA Loan Turnaround Time Compare To Other Types Of Business Loans?
We’ve established that SBA loans can take up to 90 days or more 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 an answer within only 2–4 weeks. An even faster option is an online business loan. Online resources such as Credibility Capital, Currency Capital, Funding Circle, and more 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.
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| Borrower requirements for SBA 7(a) loan: • In business at least 2 years • Owner’s personal credit score is 650 or above • Business credit score is 150 or above | |
| Visit the SmartBiz website Read our full review | |
Need Cash Fast? Two Ways To Get An SBA Loan If You Need Cash Now
If you need cash quickly, be sure to fill out your SBA paperwork and preliminary applications as accurately and robustly as possible. This is your best bet of getting a fast response from the SBA. The less they have to do to get information from you, the better your experience will be.
Of course, a speedy response is not 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 these resources for small business owners:
- Apply for an SBA loan through SmartBiz, an online resource that allows small business owners to apply for SBA loans without most of the hassle associated with the traditional process. By applying online, much of the cost, time, effort, and paperwork are eliminated. The usual 60– 90-day process is condensed into a 30-minute, user-friendly process, featuring pre-approval. SmartBiz even claims that some users receive funding in as little as five days.
- 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 bridge loan without a prepayment penalty, check out the small business loan comparison chart.
| Lender | Borrowing Amount | Term | Req. Time in Business | Min. Credit Score | Next Steps | |
|---|---|---|---|---|---|---|
| $5K - $500K | 3 - 36 months | x1.003 - x1.04/mo | 12 months | 600 | Apply Now |
| $5K - $500K | 13 - 52 weeks | x1.029 - x1.1872 | 9 months | 550 | Apply Now |
| $5K – $300K | 6, 9, 12, 15, or 18 months | x1.15 – x1.31 | 1 year | 600 | Apply Now |
| $2K - $5M | Varies | As low as 2% | 6 months | 550 | Apply Now |
Final Thoughts
While SBA loan applications do take a bit longer than traditional and online business loan applications, they do have their positive qualities. If you think an SBA loan is right for you, begin the application process before you need cash. Most importantly, be sure to look into all your options before making a decision on what is best for your small business!
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