An SBA loan is a financial instrument that can help with the expansion of your business. Even prospective business owners starting from the ground up can use this financing when eligible. In fact, 43% of small businesses were looking for an SBA loan in 2020. Business owners searching for competitive rates often wonder how long SBA loan processing takes. However, SBA processing time can depend on a number of different factors.

 

The factors that go into SBA loan processing time include:

 

● The application timeline for business owners to collect personal information

● Choice of lender

● A review period by the lender, which includes underwriting

● Underwriting, where a lender may gather appraisals for the collateral a business owner offers up

● Drafting of repayment terms within the loan agreement documents

● Closing time and reconciling any issues

 

Businesses in good standing can use these loan options and should know the timeline ahead. So, let’s look closely at how these things weigh on your SBA processing time.

 

How to Begin SBA Loan Processing

First-time applicants may find SBA loan processing to be lengthy. Checking with Small Business Bank can help determine if this type of loan is right for you.

 

Although the process can be downright complicated. We have the tools available to make navigating the process a bit less intimidating.

 

If you are an owner, you will need to be prepared to gather the necessary documents that reveal the background of your business. The lenders will need to know you can responsibly handle capital. They will want to see a business plan outlining your business’s direction and goals.

 

Additional items may include loan proposals to show the purpose of the loan. The proposal should also have details of repayment. Finally, demonstrating that you have the cash flow to cover this funding is critical. This stage may take nearly 30 days.

 

After you have all the necessary items, your loan application will enter the SBA loan processing review stage. Underwriting in this step of review can take from 10 to 14 days.

 

Once the review is complete, ideally, you will have approval over your loan. From there, your commitment letter will be on its way in a process that can take ten days to three weeks.

 

Trained lending professionals will be in regular communication to help inform you of the process. This leads us to the oh so critical next piece of how your lender will impact SBA processing time.

 

SBA Processing time can depend on your lender

 

Working with banks within the Preferred Lender Program can help with SBA loan processing. Because the SBA gives them more room to service, process, and close loans, as things typically go more smoothly with members in this program.

 

Since more small business owners are applying for SBA loans due to the COVID-19 pandemic, there have been fluctuations in loan processing time. Lenders that can determine applicant eligibility without going outside of their business can trim the SBA processing time for your application due to the streamlining of this process.

 

It is essential to note defaulting on an SBA loan with a preferred lender means the government pays that lender directly. It’s in your business’s best interest to never default and to remain in good standing with your lender. Your lender will likely review the previous two years of business, cash flow and revenue, and your business credit.

 

SBA Loan Processing can vary by the Type of Loan

 

In the case of an SBA Express Loan, the response is typically within 36 hours. Even some lenders outside of the preferred program won’t have to wait for an SBA response. After that, however, the lender will still need to take the required steps to approve the application.

 

The amount of your funding will also play a role in your chosen loan. Express loans are often for smaller amounts, a 504 loan can be up to $5 million. Thus, although a 504 loan may carry a longer SBA processing time it can be more impactful on your business.

 

Talking with your lender about which funding options best suit your business is essential. With the SBA guaranteeing to repay the lender up to 85% if a borrower defaults, the SBA loan processing can be lengthy. As a result, underwriting can carry an even longer timeline than a different conventional loan.

 

SBA Processing Time may be Worth the Wait

Business owners are enthusiastic about an opportunity for more funding. However, the SBA loan processing is not a fast cash option but can be a precious path.

 

This funding means refinancing existing debts, purchasing equipment, furniture, or real estate, and even purchasing other businesses within their reach.

 

Favorable repayment terms are worthwhile for those who are eligible. However, take the time to review the requirements and ensure you do your part as a business owner. Having the necessary documents in order can help move the process along.

 

From application to closing, owners can expect the SBA processing time to be anywhere from 60 days to around 90 days. Working closely with the professionals at Small Business Bank can ensure you address all factors within your control for a smooth process.

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