When considering a business loan, one of the most pressing questions entrepreneurs often have is, "How long does it take to get a business loan?" The timeline for securing financing can vary significantly based on several factors, including the lender's requirements, the type of loan, and the state of your business's financial health. Knowing the typical processes involved—from application to approval and funding—can help borrowers set realistic expectations and prepare adequately.

Understanding the Timeline of a Business Loan

The financing process can be straightforward if you break it down into three essential parts:

1.      Applying

2.     Underwriting

3.     Funding

Applying

The first step, applying, is primarily in your hands. You must complete an application form and provide necessary documents such as tax returns, bank statements, and business plans. Occasionally, your lender might request additional information or documentation, which could slow the process.

Some lenders have a multiphase application process. Initially, you apply online, but this may be followed by a phone call. If you're waiting for that call, the process can take longer.

Underwriting

Once you’ve submitted your application, it enters the underwriting phase. During underwriting, your lender reviews all your information to assess your eligibility for financing, the loan amount, and the interest rate. Some lenders offer automated underwriting, which only takes a few minutes. Others use manual underwriting, which can take several days.

Funding

If your application is approved, you move on to funding, where your lender provides the money. Funding can happen within a few hours if they deposit it directly into your bank account. However, if they send a check, you might need to wait a few days for it to arrive by mail.

By understanding each step of the financing process, you can be better prepared and know what to expect, making the experience smoother and more predictable.

Insights into SBA Loan Duration

Backed by the US Small Business Administration, SBA business loans have stringent requirements for lenders and borrowers, often resulting in a longer loan approval process.

It's important to note that various types of SBA financing exist, each with its own set of rules and procedures. Let's examine some of the most common loan types:

SBA 7(a) Loan

SBA 7(a) loans provide flexible working capital for various needs, including equipment and real estate. The SBA typically processes 7(a) loan applications within 5 to 10 days.

However, it's important to note that the lender you choose can significantly impact your timeline. Delays may occur because the lender takes additional time to submit your application and fund your loan after approval. Being aware of this potential can help you prepare for any unforeseen circumstances.

Consequently, it's not uncommon for the entire SBA loan process to extend beyond one month.

SBA Express Loan

SBA Express loans are designed for speed, offering quicker access to funds than other SBA loan options. Although the maximum loan amount is $350,000, these loans boast a turnaround time of 36 hours. Remember, this does not account for your lender's time to process the loan. Nevertheless, SBA Express loans remain the fastest route to securing SBA funding.

SBA Microloans

An SBA microloan could be an excellent fit if you're looking for a smaller loan. These loans are less than other SBA options, including SBA Express loans. However, don't expect a speedy process—getting your SBA microloan could still take a month or longer.

SBA 504 Loan

You can use SBA 504 loans to purchase equipment or real estate. These loans are ideal for small businesses looking to expand. However, remember that SBA 504 loans require approval from the SBA and a local Certified Development Company (CDC). This dual approval process means that obtaining an SBA 504 loan can take some time, often ranging from one to two months.
 

Where to Apply for a Business Loan

At American Capital Express, we aim to help businesses quickly secure the funding they need to thrive. Whether seeking working capital or purchasing significant fixed assets, we can help you find the best deal on an SBA loan.



Take the first step towards enhancing your business today. Reach out to American Capital Express, where our seasoned professionals are ready to guide you through the process of an SBA loan and its impact on your business.