How Long Does It Take To Get An SBA Loan?

Mantis Funding January 21, 2023

Securing an SBA loan can be a long and daunting process, but it does have some advantages for small business owners who are refinancing their debt, purchasing new equipment, or making other financial moves. An SBA loan is a loan that goes through a financial lender, such as a bank, and is partially guaranteed by the U.S. Small Business Administration (SBA), depending on the type of SBA loan. Most of them are backed up to 85% should the small-business owner fail to make payments and default on their loan. An SBA loan cannot surpass $5 million and offers benefits such as longer repayment terms and interest rate caps, which makes it enticing to small business owners who are just starting out.

In this article, we’ll dive into the ideal candidate for the SBA loan, as well as its advantages and drawbacks. As an SBA loan can take on average anywhere from 60 days to several months for approval, we’ll discuss the different types of SBA loans and their approximate time frame so you can make the best decision for your business. Whether you’re tight on cash now or planning a remodeling project down the road, those who choose to secure funding through this avenue will want to have a full understanding of the SBA loan process prior to applying and signing their name on the dotted line.

Why Should I Wait For The Longer SBA Loan Process?

With so many different financing options available, you may be wondering what sets an SBA loan apart from other funding sources and why it’s worth the wait. SBA loans have several unique advantages, which can help small business owners who have cash flow problems and other unique challenges. These types of loans can come with several perks.

The first and foremost benefit is that SBA loans don’t require business owners to sacrifice business equity to get the loan — meaning that small business owners retain 100% ownership of their business and all business decisions. Not only that, but SBA loans tend to have lower interest rates than other types of loans. It’s possible to retain a rate as low as 6.75%, pending your credit history. Another important factor is that SBA loans tend to be long-term and have an extended period for repayment. Having a flexible repayment schedule is great for your business’s growth so you can focus on the needs at hand.

While it may not be practical to wait months on end for an SBA loan, there are a few different types of SBA loans available that may make the most sense for your unique situation.

How Long Does Each SBA Loan Take?

There are different types of SBA loans available with different approval process time frames and loan amounts. Keep reading for an in-depth overview of each.

How Long Does it Take to Get an SBA 7 (a) Loan Approved?

An SBA 7 (a) loan is the most popular product offered by the SBA. The SBA 7 (a) loan offers funding up to $5 million that can be used for several business purposes, such as purchasing a franchise or buying commercial real estate. Small business owners should have a minimum credit score of 680 to apply for this loan and may need to put down some collateral. There are a few other stipulations required for approval as well, including fees and no record of recent bankruptcies.

The SBA 7 (a) loan is in high demand, which makes the process of getting it longer. The timing of the process depends on factors such as the lender and the business itself, but it usually takes around two to three months.

How Long Does it Take to Get an SBA Express Loan Approved?

The SBA Express loan follows similar regulations to the SBA 7 (a) loan, however, it has a maximum loan amount of $350,000. The SBA backs 50% of an SBA Express loan, which means the interest rates tend to be higher than other SBA loans. Since it is limited in funding, it makes it faster to get approved. People opt for this type of SBA loan in cases of emergencies when waiting too long is not feasible.

The turnaround time of an SBA Express loan is around 36 hours. Adding on the time it takes for the lender to approve the loan, it comes down to a few weeks. However, it is still considered faster than an SBA 7 (a) loan (1-2 months instead of 2-3 months).

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How Long Does it Take to Get an SBA 504 Loan Approved?

The SBA 504 loan is a product that is designed to help small businesses with the acquisition of long-term fixed assets for the expansion or modernization of businesses. The business itself must occupy 51% of the commercial space and may rent out the rest to potential tenants.

The process of an SBA 504 is different from the SBA loans mentioned above. These loans have to go through Certified Development Companies before getting approved by the lender. This process throws off the typical timeline of an SBA approval. This type of loan requires two layers of approval, which extends the wait time to a month or a month and a half. But sometimes, the wait time can go up to 6 months with this type of loan.

How Long Does it Take to Get an SBA Microloan Approved?

An SBA Microloan is a product that is designed to fund smaller amounts with a $50,000 cap. On average, most SBA Microloans are roughly $13,000. The SBA doesn’t back any amount of the loan. Instead, the SBA provides the loan to non-profit intermediary lenders at a discount then the third party will have the authority to issue the loan to the business applying for it.

What makes an SBA Microloan advantageous is that the time it takes to process is much quicker than larger loans. Businesses can receive the funds in as little as a month. However, in some cases, it could take up to three months.

Consider Gathering Documents Ahead of Time to Speed Up the SBA Loan Approval Process

As the SBA loan approval process tends to vary depending on a variety of factors, including the type of SBA loan you choose, one way you can speed up the process is by preparing your paperwork and other documents ahead of time. This will save you time and help you to stay organized. The SBA does provide a checklist of the paperwork required for applications for certain types of SBA loans.

Another way to cut down on time is by working with a bank that is part of the SBA’s Preferred Lenders Program (PLP). This way, the PLP lenders can verify your eligibility themselves instead of waiting for the SBA’s response.

You Don’t Have to Wait for Business Financing!

Waiting is part of the process when it comes to applying for an SBA loan — there’s no other way around it! If the timeframes mentioned above seem unrealistic for your business’s needs then you don’t have to wait for the lengthy SBA loan approval process. Instead, you can opt for revenue-based funding.

At Mantis Funding, we’ll help you get the most out of your revenue-based financing options where you can secure funds in as little as one to three business days after final approval. Simply fill out an application for funding today to get started!

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About Mantis Funding

Mantis Funding is a business financing solutions firm catering to small and mid-sized business owners in the United States.

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