How Long Do You Have To Wait For SBA Loan Approval?

The U.S. Small Business Administration (SBA) helps business owners access the funds they need to get their businesses off the ground, expand and succeed. These loans are often easier to qualify for than some traditional loans. Still, SBA loan approval and funding can take much longer than most loans—often anywhere from 60 to 90 days. For that reason, SBA loans aren’t the right choice for business owners who need cash quickly.

Here’s what you need to know about SBA loan approval times and how they compare to other business financing options.

Overview of SBA Loans

The SBA doesn’t lend money directly to small business owners. Instead, the SBA guarantees up to 85% of the loan amount, depending on the loan program and amount. This reduces the risk of loaning money to applicants and encourages SBA-approved lenders to work with small business applicants they might not otherwise approve. That said, there are several SBA loan programs, each with unique eligibility requirements and terms:

  • SBA 7(a) loans: The SBA 7(a) program offers several types of loans up to $5 million available for various business purposes. Standard 7(a) loans and small 7(a) loans come with SBA turnaround times between five and 10 business days, but the process takes longer.
  • SBA Express loans: SBA Express loans are available for up to $500,000, with repayment terms of up to 25 years for real estate and five to 10 years for other loan types. Express loans fall under the 7(a) umbrella; however, the program offers accelerated approval times. Individual lenders make eligibility decisions, but the SBA turnaround time is just 36 hours.
  • Certified Development Company (CDC)/504 loans: CDC/504 loans can be used to purchase equipment and real estate. Loans are available for up to $5 million, with 10- and 20-year repayment terms.
  • SBA microloans: Microloans max out at $50,000, though the average microloan is just $13,000. The minimum repayment term is six years, and interest rates range from 8% to 13%.
Read more  How to get licensed as a mortgage loan officer in multiple states 

While SBA loans can be easier to qualify for than other types of business financing, the application process is extensive. You must provide comprehensive documentation, including a business plan, copies of business and personal tax returns, business balance sheets, profit and loss statements and a list of current business debts.

How to Get Approved for an SBA Loan

The SBA loan approval process takes 30 to 90 days from application to funding. However, this time frame varies by lender and loan type. The exact steps for getting an SBA loan can also differ from lender to lender, but there are a few general stages in the approval process:

  1. Loan application. The SBA loan application process is more demanding than traditional lenders, and prospective borrowers must submit extensive supporting documents. For this reason, application preparation can take as long as 30 days. However, you can complete an application more quickly if you have already gathered the necessary documentation.
  2. Application review and underwriting. After an application is submitted, the lender will review your credit score and financials. This process typically takes between 10 and 14 days, including the underwriting process, but can take longer for lenders that aren’t in the SBA’s Preferred Lenders Program. Likewise, if collateral is required, the lender may order an appraisal during the underwriting process. Based on this review, the lender determines the loan amount and interest rate you qualify for.
  3. Loan agreement. Following approval, it typically takes 10 to 21 days for the lender to prepare the loan agreement and commitment letter. During this time, you should review the loan agreement to ensure that all terms are acceptable.
  4. Closing and funding. Closing and funding generally occur seven to 14 days after finalizing the loan amount, repayment term and interest rate in the commitment letter. If the lender contacts you with questions or additional requests during this period, respond quickly to keep the process moving.
Read more  Small Business Loans New York

How Will I Know If My SBA Loan Is Approved?

If your loan is approved, the SBA will send you an email with loan details. Contact the SBA directly if you have not received an email and want to check your application status. Depending on your lender, you may also be able to check your application status online or by contacting your loan officer.

How Long Does It Take to Get SBA Loan Funds After an Approval?

After an SBA loan is approved, it usually takes around five days for the lender to disburse loan funds—but it can take up to 14 days. That said, the actual amount of time it takes for you to receive loan proceeds depends on the lender and the business’ bank.

SBA Loan Process vs. Other Business Loans

Lengthy SBA loan approval times do not align with every small business owner’s borrowing needs. Other business loans can provide funds more quickly and, sometimes, with less stringent application requirements. Here’s how the SBA loan process compares to some other common financing options:

  • Business lines of credit. A business line of credit lets you draw on funds as needed and only pay interest on the amount borrowed. Approval times are shorter than for an SBA loan, with funds sometimes available in as few as 24 hours after submitting an application. Business lines of credit generally have lower borrowing limits than SBA loans, but they’re revolving so you can access the money again after the balance is paid off.
  • Online loans. Several online lenders offer business loans with quick approval times—sometimes as soon as the same day. These lenders often work with businesses that may not qualify for financing from a traditional bank. However, online loans tend to have higher interest rates and shorter repayment terms than SBA loans.
  • Equipment financing. Equipment financing is a type of business loan business owners can use to purchase equipment or machinery. These loans typically have shorter repayment terms than SBA loans and may also have higher interest rates. Financing may be available in just 24 hours or take up to several weeks.
  • Alternative loans. Alternative loans are another type of financing that can have quick approval times, some with same-day approval. These loans are available from many online lenders and are used for a variety of purposes, including working capital, equipment financing and expansion. However, alternative loans also tend to have higher interest rates than SBA loans.
  • Personal loans. Getting a personal loan can be much faster than getting an SBA loan, as the application process is generally more straightforward and approval times are shorter. However, personal loans typically have shorter repayment terms and higher interest rates than SBA loans. Plus, some lenders restrict the use of personal loans for business purposes.
Read more  Top 5 Ways for Loan Officers to Attract Better Clients for the New Year