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Updated: January 26th, 2021
When cash flow is tight, business owners often need access to financing yesterday. But if you are pursuing an SBA or SBA 7(a) loan, chances are you’ll have to be patient. That’s because the government agency’s wheels can turn slower than you might like, meaning it can take longer to get an SBA loan. That’s not to say you don’t have options.
Something to remember about the SBA loan approval process is that you’re not knocking on the government agency’s door for financing. Instead, you work with vetted lenders that play by the agency’s rules. This process inevitably means that there are more steps involved in the SBA loan closing process.
So, you may be wondering: “How long does it take to get an SBA loan?” The short answer is that you could have the funds in your account anywhere from 30 days to a couple of months or longer. By nature, these are not emergency lifelines, unlike SBA’s Paycheck Protection Program (PPP).
Therefore, they should be used as a financial tool for which you prepare in advance. Let’s explore how long SBA loan approval commonly takes.
You may be wondering what the benefits of an SBA loan are, especially if you’ve got to wait for it. Chief among the pros of an SBA loan is you’re not giving anything up. As a business owner, you can borrow anywhere from $500 to $5.5 million.
Another attractive feature is the long-term nature of the products. For example, some repayment terms extend for more than two decades (for non-real estate loans). The SBA also caps the amount borrowers should repay in interest. The longer-term combined with the cap translates into a lower interest rate for business owners like you when cash flow is tight. The SBA loan approval process is a bit of a waiting game, so let’s get to it.
The SBA’s most popular product is the standard 7 (a) loan. That’s most likely because there is so much flexibility in the use of proceeds. From using it for working capital to buying equipment, refinancing debt, and more, the options are highly versatile. Keep in mind: The most you can borrow with an SBA 7(a) loan is $5 million.
Indeed, these loans are in high demand, but you’ll have to wait. The turnaround time from soup to nuts could be anywhere from two to three months. How long it takes to get an SBA 7(a) loan will depend on you, while some of it will depend on your lender.
Much of the waiting time spent during the SBA loan approval process – possibly up to 30 days – you’ll spend gathering documentation for the lender to process. Luckily, the SBA conveniently outlines this for you in this checklist.
After you’ve applied, it can be another few weeks before you receive a decision. This extra SBA loan processing time is because the lender must weigh details ranging from the loan amount to the purpose of the financing.
Once you’re approved for the loan, be prepared to wait some more. There will likely be more documents for you to fill out as things are finalized in this part of the SBA loan closing process. From there, by the time the documents are processed, and the lender sends the funds to your account, it could be yet another couple of weeks before the money arrives.
Of course, situations arise in which you just can’t wait that long. In cases where emergency funding is needed, you may be interested in the SBA Express Program. It’s a slimmed-down version of the 7 (a) product in that you can only borrow up to $350,000. But, this lends itself to faster SBA loan approval times.
The SBA promises a turnaround time of 36 hours for their express loans. But, that doesn’t include the time it takes for the lender to approve the loan, which could tack on another few weeks. So, instead of 60-90 days, you’re looking at 30-60 days for the SBA loan processing time when all is said and done.
Next up is the SBA’s 504 loan program. If you’ve not heard of this product, it’s designed to help small businesses with “long term, fixed-rate financing to acquire fixed assets for expansion or modernization,” according to the agency. The loans are facilitated through Certified Development Companies, which throws a wrench into the SBA loan processing time.
The Certified Development Companies are brought into the process because the loans require two layers of approval — the SBA and its partner, the CDC. As a result, how long it takes for SBA 504/CDC loan approval will vary. But, you can expect to wait from a month to a month and a half from when you complete the application to receiving financing. However, SBA loan processing times of up to six months aren’t unheard of for this particular product.
The SBA also has a microloan program, which, as the name suggests, is for smaller amounts that have a cap of $50,000. The beauty of these loans is that the SBA loan processing time is quicker than the more substantial loans. As such, you can have the funds in your account in as little as a month. However, it could take up to three months.
The downside of SBA microloans is that they can be less straightforward. That’s because the SBA initially lends the funds to designated intermediary lenders at a discount. They then have the authority to issue loans to small businesses.
If you’re a for-profit startup (or a non-profit child care center) in the process of polishing up your credit, the microloan could be the right product for you. A big reason for this is that the credit score standards tend to be less stringent than the 7(a) loan. The microloan is popular among women and veteran-owned businesses, as well as minorities and low-income entrepreneurs. A piece of information to keep in mind with microloans: You’re looking at repayment terms of 10 years.
When pursuing an SBA loan, patience is a virtue. But, you don’t necessarily need to wait out the approval process. The rise of fintech has introduced a segment of online lenders – like Funding Circle – that are designed to deliver speedy business loans in a fraction of the time it takes the government agency. The answer to “how long does it take to get an SBA loan?” doesn’t have to be one that deters you. Get funding quickly and easily: You can apply directly through Funding Circle for an SBA 7(a) loan today.
Jessica Holcomb is the Content Marketing Manager at Funding Circle, specializing in small business marketing and social media. She has a degree from the Fashion Institute of Design and Merchandising. Prior to Funding Circle, Jessica was a Marketing Manager at a successful social games company and a freelancer for many small businesses in the Bay Area. Her work can be seen in top retail, gaming, and financial small business resource sites.