SBA loans take longer to process than traditional loan applications, but they do have their positive qualities, including low interest rates and long repayment terms.
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Looking for information about when your SBA Economic Injury Development Loan (EIDL) for COVID relief will be funded? In May 2022, the SBA stopped processing all EIDL loans, including loan increase requests or requests for reconsideration. If you did receive any EIDL funds from the SBA, learn about EIDL forgiveness.
The SBA loan process requires time and patience; potential borrowers must go through many steps of paperwork and vetting. Exactly how long do SBA loans take to process? With typical SBA lenders, the SBA loan disbursem*nt process takes two to three months. Some SBA lenders offer funding in as little as 30 days, although this is quite rare. Read on to find out how long you may have to wait and how to speed up your SBA loan approval time, as well as faster SBA loan alternatives.
Table of Contents
- SBA Loan Processing Time
- What About SBA Express Loans?
- Why SBA Loans Take So Long: The SBA Loan Timeline
- How SBA Loan Processing Timeline Compares To Other Business Loans
- Is It Worth Waiting Out The SBA Loan Process?
- Two Ways To Get An SBA Loan If You Need Cash Now
- What Happens After SBA Loan Is Approved?
SBA Loan Processing Time
The expected SBA loan approval time varies, depending on the type of loan you are applying for. Learn more about the SBA 7(a), SBA 504, SBA microloan, and SBA disaster loan disbursem*nt schedule:
SBA 7(a) Loan Approval Time
An SBA 7(a) loan usually takes about two to threemonths to be approved. If you have the option of working with an SBA Preferred Lender (the best SBA lenders), your application may be approved much faster, comparatively speaking. Of course, the exact time it will take to be approved depends highly on you and your lender.
SBA 504 Loan Approval Time
As with other loans, the approval time allotted for SBA 504 loans varies drastically. On average, the loans take around 30-45 days from application to funding. Approval time, however, can take anywhere from one to sixmonths. Because the 504 lending program is a dual-approval loan involving both a Certified Development Company (CDC) and the SBA, there are more variables to consider. The timeline relies heavily on the borrower and their specific needs.
SBA Microloan Approval Time
SBA Microloans are given in smaller amounts — $50,000 or less — so the process can be somewhat shorter. Receiving a microloan can take anywhere between 30 and 90 days. Your application must be approved by both an intermediary lender and the SBA, so patience is key when waiting on a microloan.
SBA Disaster Loan Approval Time
Receiving an SBA disaster loan is a three-step process: Application, Property Verification & Loan Processing Decision, and Loan Closing & Disbursem*nt of Funds. The SBA states that the first and second steps of the SBA disaster loan timeline take an average of four weeks. Step 3 (the SBA disaster loan disbursem*nt process) takes around five days for borrowers to receive funds.
What About SBA Express Loans?
Are SBA Express loans actually faster than regular SBA loans?
In short, yes. The downside is that, while the SBA Express loan approval time is much quicker than other SBA loans, the maximum loan amount is low at $350,000. The Express loan is typically approved by the SBA within 36 hours, making it the fastest SBA loan disbursem*nt. However, the approval from the partnered bank could take several weeks, which means that the total time to funding could still be one to twomonths, depending on thelender. Still, this is at least a month faster than most other SBA loans.
As with other SBA loans, you will also need to prepare a comprehensive loan application package to apply for the Express loan. This process, of course, will take some time, though Express loans require fewer documents compared to a 7(a) loan. Required forms for an Express loan include a Borrower Information Formand a Statement of Personal History.If more than $10,000 in loan funds will be used for construction, you’ll also need to fill out an Agreement of Compliance. The Express loan’s issuing bank should provide direction on how to put together the application package and help you work through the process as needed.
Another thing to know about Express loans is that because the SBA backs only 50% of an Express loan (compared to 75%-85% of a traditional 7(a) loan), interest rates on Express loans tend to be somewhat higher.
Why SBA Loans Take So Long: The SBA Loan Timeline
When applying for an SBA loan, know that you’ll need to be patient. Most of these loans require a lot of documentation and verification, which makes the SBA loan application process quite lengthy.
If you’re applying for a 504 loan, your application will be roughly thirteen pages long. You’ll need information on project costs, energy efficiency goals, debenture pricing, and more. Because the 504 loan is a dual-approval process, it can take even longer. Your completed application will be submitted to the CDC, which will then assess the application and forward it to an SBA Loan Processing Center.
Other SBA loans have similar processes in which a potential borrower must fill out an online form describing the business’s needs. From there, the SBA will match you with possible lenders with whom you can discuss SBA loan rates and terms and formally apply for their loan.
These in-depth applications do take time to fill out. Once the application is completed, the documents must be reviewed by multiple sets of eyes, which makes the waiting periods lengthy.
First Step: Putting Together An SBA Loan Application Package
Here are some items you will need in your SBA Loan Application Package:
- Business Plan: Your lender wants to see concrete evidence that your business will be able to pay back the loan. You can show this by including:
- A description of your small business, including information on your product/service
- Plans for your business
- An outline of your team
- Statement Of Purpose: This is your opportunity to tell the SBA what you intend to do with any funding you receive. You will need:
- A statement on how the loan will benefit your business
- An explanation of how you, as a business owner, have invested your personal resources into the business
- Any other information you have about your loan request
- Financial Statements: Here’s where you can show the lender that the numbers are in your favor. To demonstrate that you are financially capable, you will need:
- Personal Financial Statements: personal net worth, debts
- Cash Flow Statements: income, expenses
- Income Statements: profit, loss
- Balance Sheets: business value and/or net worth
Next Step: Underwriting
Formal underwriting for an SBA loan usually takes about two to threeweeks. This time allows either your underwriting team or loan officer to discuss any questions or concerns they may have about your loan. During this time, you may be asked to participate in more meetings to discuss your plans or even to fill out more paperwork. The underwriting period can take longer if the SBA requests extra documentation.
Final Step: SBA Loan Disbursem*nt Process
Once you’ve been approved, it generally takes funds about five days to reach your account. The timeframe can vary depending on the type of loan and your particular case. Be sure to ask your lender how long it takes for approved funds to get disbursed.
How SBA Loan Processing Timeline Compares To Other Business Loans
| SBA 7(a) Loan | SBA Microloans | SBA Disaster Loan | Online Business Loans | Traditional Business Loans | |
|---|---|---|---|---|---|
| Typical Time To Funding | 60-90 days | 30-90 days | 4 weeks | 1-5 days | 2-4 weeks |
| Best For | Expanding a small business | Small startup loans | Rebuilding after a natural disaster | Small, fast loans (bad credit OK) | Established businesses |
| Max. Loan Amount | $5 million | $50,000 | $2 million | Varies (usually ~$250K) | Varies (usually ~$1 million) |
We’ve established that SBA loans can take up to 90 days or longer to be approved and released to small businesses.
In comparison to other business loans, this is quite a lengthy process. When applying for a traditional business loan at a bank, you can expect to get funded within only two to four weeks. An even faster option is an online business loan. Online resources, although more expensive than an SBA or a bank loan, boast short applications that take minutes and can provide funding within as little as 24 hours.
The appeal of an SBA loan, of course, is not that it is quick or simple but that it is guaranteed in amounts up to 85%, and often offers low rates and long terms.
If the loan amount matters more to you than speed, it’s important to note that the average business loan is usually a lot smaller than the stated maximum borrowing amount. Federal Reserve data (as compiled by Bankrate) shows that the average SBA loan is $107,000, compared to $593,000 for a business loan from a large national bank, or $146,000 from a smaller regional bank. The average alternative online loan is $50,000 to $80,000. And the average SBA Microloan (per the SBA’s Microloan information page) is just $13,000. Of course, the amount you’re ultimately approved for will depend heavily on your business credentials.
Is It Worth Waiting Out The SBA Loan Process?
This depends entirely on how fast you need the money.
If it’s an emergency and you need funds in less than three months, or your business will not survive, then the long SBA loan approval time will probably be a dealbreaker. Instead, you should seek out an alternative loan—such as a short-term loan. However, if you can reasonably wait up to a few months to get funded, then it is absolutely worth waiting for an SBA loan. You won’t be able to get as good of a rate outside of the SBA.
Two Ways To Get An SBA Loan If You Need Cash Now
If you decide to proceed with an SBA loan, but still want to get your cash as soon as possible, be sure to fill out your SBA paperwork and preliminary applications as accurately and completely as you are able. This is your best bet for getting a fast response from the SBA. The less the SBA has to do to get information from you, the better your experience will be.
Of course, a speedy SBA loan approval time is never a guarantee, even if you do have all your documents in order. If you truly need to know your funds will be here sooner than later, you can check out the following resources for small business owners.
1. Apply For An SBA Loan Online Through SmartBiz
SmartBiz is an online resource that uses technology to speed up the SBA loan application process so that you receive your SBA loan in about two to six weeks from application to funding. You can think of it as a hybrid online loan/SBA loan. By applying online, much of the cost, time, effort, and paperwork of the traditional SBA loan application process are eliminated. SmartBiz can also help you determine if you have a good chance of qualifying for a loan before you fill out a full application, saving even more time.
2. Get A Bridge Loan
A bridge loan is a transitory, short-term loan that your small business can use until all of your needed funding comes in from other sources. If you’re looking for a temporary bridge loan (without a prepayment penalty), check out the best small business loansbased on our research.
FAQs About SBA Loan Process & Approval Time
How long does it take to get an SBA loan?
Generally speaking, it takes around 60 to 90 days from start to finish to get an SBA loan.
How long does it take for SBA loans to be deposited?
The entire process to apply for and receive an SBA loan takes about one to three months, or sometimes as long as six months for a 504 loan.
How do I check the status of my SBA loan after approval?
The best place to check your SBA loan status will depend on the type of loan you’re getting and how you applied. You might be able to check via an SBA online portal, by calling the SBA, or by contacting the loan intermediary or lender you have been working with.
What is the SBA loan processing time?
The SBA loan processing time is the time the SBA and its partner lenders spend assessing your loan application. It can take up to a few months.
What happens after an SBA loan is approved?
After your loan is approved, the funds will be transferred to your bank account within about 5 days.
Why do SBA loans take more time to be approved?
SBA loans take a long time to be approved because they have a long, detailed application that must be processed by multiple organizations.
What Happens After SBA Loan Is Approved?
You went through the entire SBA loan process, from application to underwriting, and your loan has finally been approved. So how long does it take to get the SBA loan once it’s approved? Your SBA loan should hit your bank account about five days after approval. (For comparison, PPP loans took up to 10 days.)
SBA Loan Approval Time & Disbursem*nt Process: Key Takeaways
While the SBA loan process does take a bit longer than traditional and online business loan applications, SBA loans do have their positive qualities, some of which include low-interest rates and long repayment terms. If you think an SBA loan is right for you, begin the application process before you need cash. This way, the potentially lengthy SBA loan processing timeline won’t be a hindrance to you. Most importantly, be sure to look into all your options before deciding on what is best for your small business.
If you need a faster small business loan than what the SBA can provide, some other options to consider might include business loans for bad credit or abusiness line of credit.
