Whether you are starting up a new business or expanding your existing one, there may come a time when you need the financial assistance of a small business loan. Before an SBA loan is approved the bank completes a thorough vetting process, and this process takes time. For this reason, business owners frequently ask about the estimated time it takes to get a loan application approved. The answer depends on several factors since SBA loans are a multi-step process.
Steps To SBA Loan Approval
Like other loans, small business loans involve a thorough vetting process. Applications are notoriously lengthy and detailed, and the documentation is abundant. A solid, detailed business plan must be laid out along with estimated project completion dates and current financial statements. Underwriting usually takes several weeks, during which a request for additional information and documentation is not unusual.
How To Speed Up the Process
One of the easiest ways to make the application and approval process as fast as possible is to be prepared with documentation on the front end. Make sure all of your paperwork is complete before submitting the application to reduce the amount of documentation or clarification that will be needed from underwriting. Another way to speed up approval is by using a preferred lender. Some lenders will allow you to become prequalified so part of the process has been completed before the actual SBA loan process begins. Finally, if you can get by with a smaller amount consider looking into a microloan. These loans do not provide as much capital but have a faster approval time.
General Approval Timeline
If you choose to apply for a small business loan through traditional lending means, the total approval time can be anywhere from two to three months. Some specific types of SBA loans, such as 504 loans, microloans or disaster loans can result in much faster turnaround time. These types of loans can sometimes provide funding in as little as four weeks but have specific guidelines for situations that would qualify. Other options include SBA express loans and online business loans, which have gained popularity in recent years due to faster approval times.
Securing funding for your small business can involve a traditional SBA loan or one of a number of other express options. Since any time of business loan comes with advantages and disadvantages, it is important to do your research in advance to see which type of loan would be best for the long-term success of your business.