The Small Business Administration typically takes a significant amount of time to approve your loan application. Nonetheless, many business owners attempt to obtain funding through the Small Business Administration. This is due to the fact that they are aware of the fact that it is one of the most affordable methods of obtaining capital for businesses. How long does it take to receive the funds after receiving approval for an SBA loan? Find out more by reading on.
Loans from the Small Business Administration: How they work
Before discussing the approval process for SBA Loans, let us first examine the program in more detail. The U.S. Small Business Administration provides financial assistance to businesses that have been denied funding by conventional banks, despite their creditworthiness. The amount of these loans can range from small to large sums, and the 7(a) loan program allows the funds to be utilized for a wide variety of business activities.
Even so, SBA loans are extremely difficult to obtain since the SBA eligibility criteria are very stringent.
In addition, it is imperative to clarify that the SBA does not lend money directly to businesses. In lieu of this requirement, the agency offers a guarantee to the lender for a substantial portion of the loan. If a borrower defaults, the SBA will compensate him or her for the amount it has guaranteed. With the assistance of this guarantee, financial institutions will be able to offer better interest rates and more flexible terms to their customers. This is because they will be able to lower the risks associated with lending to businesses.
By submitting your application with a company experienced in facilitating SBA loans, such as Small Business Lending Source, your application will be approved and funded more quickly.
Business owners can choose from three loan programs offered by the SBA according to their business requirements. Specifically, the 7(a), the CDC/504, and the Microloan.
Since every business loan request is unique, the SBA does not have a standard timeframe. That being said, it generally takes 60 to 90 days to process a loan guaranteed by the Small Business Administration, with applications for large sums ($1MM+) taking longer.
An SBA loan is approved based upon several factors, including:
Your ability to provide a complete loan application in a timely manner
in accordance with your loan request
as well as reviewing any existing business debts
both personally and for your business
based on the extent to which you have collateral (real estate and/or inventory)
Many banks do offer SBA loans, but each has its own underwriting guidelines. By working with a business loan provider such as Small Business Lending Source , you have access to many more SBA loan options than you have with your bank. You should present your loan request to a credit committee even if you decide to work with your bank. The incorrect documentation may lead to the denial of your loan application. We are experienced in structuring many types of commercial financial transactions, including different types of SBA loans. Applying to an SBA loan with an experienced company can significantly increase the likelihood of being approved.
Would it be possible to expedite the process?
Yes, you can contribute to the speedy processing of the loan application.
The first step is to ensure that you meet the minimum qualification criteria before applying. An SBA loan is generally only available to businesses with a credit score of 660 or higher, two years in business, and gross annual revenues of at least $250,000. If your business meets these requirements, then you are eligible to submit an application. Once you have decided to proceed, a second step to improve your chances of approval is to provide all the required documentation (2 years of business and personal tax returns, bank statements, financial statements, etc.). Your application will be delayed if it is incomplete.