If you’re considering applying for an SBA loan for your small business, you’re likely wondering, “how long does it take to get an SBA loan?”
Every business loan has its own timeline and requirements, and much of the time to funding can also depend on you, the borrower. Having all your documents and information ready to go when it’s needed goes a long way in streamlining the process.
If an SBA loan your only option, you’re in good company! These programs have helped millions of business owners get the financing they need with excellent borrower benefits and terms. When you understand the process and timeline, you’ll be ready to apply with ease.
Here’s what you need to know about the SBA loan process.
Key steps and timelines in the SBA loan application process
In general, the loan application process is just a few steps. You submit your application, your lender decides on the loan, and then you receive the cash.
But when you dive into each step, you’ll find it’s a little more involved. Here’s how it usually goes for an SBA loan:
- You’ll have an initial meeting(s) with your lender to determine the best product for yours needs
- You’ll complete your loan application
- Your lender will underwrite the loan request
- Your lender will make a decision for approval or denial
- If your lender approves you, they’ll need to send the loan package to the SBA for their decision
- There will be a commitment and due-diligence period
- You’ll reach the closing table and disbursements will begin
Let’s take a look at each step, how long each may take, and what you can do to keep things moving forward efficiently:
1. Initial meeting(s) with your lender
This part of the process starts when you reach out to a lender about a loan for your business. Whether you go to one lender or explore several potential options, this step can take anywhere from a couple of hours to several weeks.
Timeline: Once you’ve chosen a lender, the first meeting can be done in about two hours or less. Your lender will listen to your needs and find the best product to fulfill them.
Efficiency tip: Before you meet with your lender, ask them if you should bring any documents or additional information to the meeting. For example, having your personal and business tax filings, cashflow forecast, financial projections, and your business plan may be more than you need, but it can’t hurt to be prepared and may save you some time.
2. Completing your loan application
This is where you’ll share information about your business, how much funding you need, and how you’ll use your loan. The SBA application is relatively straightforward as long as you have good records available.
Timeline: If you’re keeping good, updated records and documentation, the application should take a few hours to a day to complete. However, if you don’t have the information ready to go, it can take longer. It all depends on how long it takes you to gather the required documents.
Efficiency tip: Before you begin your application process, review the application and gather all the documents/records that you’ll need. If you need to make updates to your records, do it now so you’ll have accurate information to share.
3. Underwriting the loan
During this step, your lender’s underwriting team will research the information you’ve provided, check for completeness, and verify accuracy. They’ll review your personal credit history along with your business history and financials. They’ll also review any additional required documentation, such as permits, licenses, insurance policies, and others.
Timeline: The underwriting process varies depending on the loan use, the amount you’re requesting, the documentation that’s required and what you’ve provided so far, and how quickly you respond to questions. For example, an SBA Microloan for working capital will likely have a quicker underwriting timeline than an SBA 504 loan that’s being used to purchase and renovate commercial property. Your lender can provide the best timeframe for your situation, but generally speaking, you should expect:
- About 7-10 business days for an SBA Microloan.
- About 10-14 business days for SBA 7(a) and Community Advantage loans for working capital, equipment purchases, leasehold renovations/improvements, inventory, and to purchase commercial real estate for your business.
- About 10-14 days for the SBA 504 underwriting process, including loans for purchasing or renovating an existing building, new construction of commercial property, equipment purchases, and refinancing existing business debt.
Efficiency tip: It’s during the underwriting process that many loans get delayed. More often than not, it’s because a borrower doesn’t respond quickly to lender inquiries, or they put off returning documents or signing paperwork.
To avoid delays on your end, respond to any calls, texts, or emails from your lender right away. At this point in the process, they’re usually contacting you to request additional documentation or to respond to questions raised by the underwriting team. Delayed responses can lead to long delays and a lot of unnecessary stress for all parties.
4. Lender decision
Once the underwriting phase is completed, your lender will decide whether or not to move forward with your loan. If your loan is approved, then it goes on to the SBA for review. If your loan is denied, talk to your lender to learn why and what you can do to qualify in the future. They might be able to give you a reasonable timeframe to fix any shortcomings in your application and direct you to resources to strengthen your business.
Timeline: The timeline for your lender’s decision will vary depending on the loan program. For SBA 7(a) loans, the decision period depends on how long your application takes to get through the underwriting process. For SBA Microloans, the timeline for your lender’s decision can be as quick as 5 – 7 business days but can take up to 30, depending on the strength of your loan application. With SBA 504 loans, it can take up to 45 days from when your lender receives your full application.
Efficiency tip: At this point in the process, you can’t do much to decrease the timeline. You can only control your own preparedness before you apply and the accuracy and completeness of what you submit. If you’re worried about a denial, address that in the initial meeting with your lender. Give them as much information as you can upfront so they can direct you to the best-fit product, and so there aren’t any surprises for the underwriting team.
5. SBA review and decision
This step will take place at the same time as the lender’s underwriting process, or after. During this step, you may be asked to sign and/ or submit more documents. This part might feel repetitive, but it’s a required part of the SBA loan process.
Timeline: The timing for this step can vary:
- SBA Microloans usually take a day to review once lender approval is received.
- SBA 7(a) and Community Advantage loans may have about a 10–14 day review.
- SBA 504 loans have the widest timeline for SBA reviews. It can take about 10-14 days for non-real estate projects, while real estate projects can take about 1-2 months. Just keep in mind that some of the steps for SBA 504 approval will happen at the same time as your lender’s underwriting process.
6. Commitment and due-diligence period
At this point, your lender and the SBA have approved your application and given an initial commitment for your loan terms. As the closing process gets closer, your lender will need updated versions of what you initially submitted as it may have been several weeks or months since you completed your application.
The SBA will likely request updated financial documents, re-review your credit history, and request disclosures. This is all done to make sure there haven’t been any significant changes since you first applied.
Timeline: For SBA 7(a) and SBA 504 loans, this step will often be done as part of the SBA review process, while SBA Microloans skip this step entirely. Keep in mind that this step may add on an additional 4-6 weeks if your loan is being used for commercial real estate purchases, renovation, or new construction.
Efficiency tip: Remember that it’s perfectly normal for your lender and the SBA to ask for information that you’ve already submitted. Continue to keep your information and documents updated so they’re ready to go when needed, and keep the process moving forward by sending in the documents and signatures promptly.
7. Closing your loan
Congratulations! You’ve reached an enormous goal! As long as your team (including your attorney, your lending representative, and anyone else you need) is ready, the actual closing will go smoothly and quickly.
Depending on the type of SBA loan, the amount, and the project, your disbursements can be in a lump sum or paid out throughout your project. Your lender will let you know which method they’ll use in advance. In some cases, they’ll also work with you on a bridge loan to cover things like construction expenses until the final closing and disbursements.
Timeline: With all the pieces in place, the closing process can be relatively quick. Disbursements may take place as a lump sum or over the course of a larger project.
Efficiency tip: If you need a bridge loan to cover expenses, let your lender know in advice. The sooner they’re aware of your needs, the better they can fulfill them and keep your business growing.
How long does it take to get an SBA loan? It depends…
As you can see, there are a lot of variables to consider when answering the question, “How long does it take to get an SBA loan?” Every loan process will require specific steps and documentation, sobeing prepared and responsive is the best way to move forward.
In summary, it’s best to expect and allow for:
- 60-75 days for non-real estate deals, including the application, underwriting, decision process, commitment, due diligence, and closing processes.
- 75-90 days or more for real estate deals – and possibly longer if the deal includes brand new construction or major renovations.
And don’t forget: When the process gets delayed, it’s often due to a lack of communication. Make sure you stay on top of all communications with your lender and the SBA to keep the process moving forward.
Pursuit will be with you every step of the way
Every day, Pursuit’s works with business owners to make the loan process as efficient as possible. With more than 15 small business loan options, we can help you find the funding that fits your needs and successfully navigate the loan application process. Reach out to us today to see how we can keep your business growing.