What’s the SBA Loan Timeline? (Hint: Hope You’re Patient)

Meredith Turits

Managing Editor at Fundera
Meredith is Fundera’s Managing Editor, overseeing editorial. Drawing on her own background in small business and startups, she writes on business, finance, and entrepreneurship. Meredith has contributed to publications including the New Republic, Rolling Stone, Vanity Fair, The Paris Review Daily, and more.

If you’re a small business owner in search of financing, odds are that you’re hoping to get approved for a loan sooner rather than later. That makes sense—many business owners seek out a small business loan because of dwindling cash flow, or an obvious need for more working capital. And if you’re looking into a big sum of money, you’ll want to know the SBA loan timeline specifically, plus how it stacks up against other small business loans and alternative financing products.

We won’t sugarcoat things and tell you that if you apply for an SBA loan, you’ll have cash overnight. Because, well, you won’t. That said, the SBA loan timeline really isn’t forever—especially for the worthwhile payoff at the end.

The SBA loan timeline can seem a lot longer than it is in reality, especially because of the amount of paperwork required in your SBA loan application. To get an SBA loan, you’re going to need a few reams of paper at the ready, since you’ll have to be prepared to submit a business plan, tons of financial statements, and documentation for each business owner’s personal and professional history. (And some other stuff, too, which we’ll detail.)

Then, of course, there’s underwriting and approval, which takes time on its own. We’ll go through the SBA loan timeline and see how much longer it really is compared to other business loans—and whether the extra effort, and the extra wait, too—is really worth it.

How Long Is the SBA Loan Timeline?

The average SBA loan timeline is generally 60 to 90 days, depending on the lender and the size of the loan. And, usually, the larger the loan—and the longer the term you apply for—the harder a lender will scrutinize your application, which might extend the SBA loan timeline. The length of pre-submission process, however depends on you. Before you even submit your application, you’ll need to compile the extensive paperwork required by the Small Business Administration for your SBA loan package.

The actual SBA loan timeline to approval actually isn’t any longer than that of standard business term loan from a bank. But the extra time-consuming part of the process happens before you even apply, and it relies on your ability to pull together all of the material required to submit your SBA loan application successfully. The rest of the process includes any back and forth with your lender if they need additional documentation, followed by underwriting and approval.

Here’s Why the SBA Loan Timeline Is Drawn Out By Its Application

We keep saying that a big part of the SBA loan application timeline has to do with the SBA loan application itself, and just how complicated it is. We should probably explain so you can see for yourself how an SBA loan application differs from other small business loan applications.

A Quick SBA Loan Refresher

As we discuss the SBA loan timeline, let’s make sure that we’re all talking about the same thing. Unlike other small business loans, SBA loans are linked to—you guessed it—the US Small Business Administration. Since the SBA’s purpose is to spur the growth of America’s small businesses, they help business owners get access to capital by backing loans that are executed by a network of lenders across the country.

Contrary to popular belief, the SBA doesn’t lend money itself: it guarantees a certain percentage of each loan, up to 85% of funding granted, which lowers the risk that banks take on when working with qualified entrepreneurs.

There are three kinds of SBA loans for which you can apply, depending on how much money you need and what you plan to do with it:

  • SBA 7(a) loan, which provides as much at $5.5 million in cash with repayment terms up to seven years
  • CDC/504 loans, which are designed to help purchase real estate and machinery and now have loan terms as high as 25 years
  • SBA microloans, which provide as much as $50,000 in cash with a six-year max repayment period

Bear in mind, however, that you’re going to have to provide your lender with a ton of information about your company, as well as yourself. SBA loans are the hardest loans to get and typically go out to only the most qualified candidates, so having immaculate profit and loss statements, a sturdy business plan, and sparkling personal credit will go a long way toward obtaining a loan.

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What’s Required for an SBA Loan Application?

Before you can even apply for an SBA loan, you’ll have to pull together a bunch of paperwork to provide the lender. Here’s what you’ll need for an SBA loan application:

  • Personal background statement (including previous addresses, names you’ve used, criminal records, educational background, etc.)
  • Your resume (and the resumes of any business partners and co-owners you may have)
  • Business loan request letter and/or a business loan proposal
  • A business plan (including financial projections as well as qualitative goals for your company)
  • Use of loan information (how you intend to use the loan—is it to buy equipment? Purchase another company? Buy real estate?)
  • Time in business and business size (how old and how large is your company?)
  • Personal credit report (both for you and any co-owners/business partners)
  • Business credit report (the credit standing of your company, if you’re already in business)
  • Personal and business income tax returns
  • Financial statements (think P&L statements, balance sheets, and debt schedules if applicable)
  • Collateral (what are you willing to give to the lender if you can’t pay back your loan?)
  • Legal documents (business licenses, articles of incorporation, contracts with suppliers/vendors, franchise agreements, and leases for commercial vehicles or real estate, just to name a few)

There’s also a good chance there will be more paperwork required—this is likely just a start. Your loan specialist can help walk you through what you exactly what you need to get ready.

But as you can see, the SBA and your lender are going to want you to open the books pretty wide before handing you an SBA loan. And getting all of this documentation together might take a bit of time.

Even though you’re probably the kind of business owner who has things organized if you’re a good candidate for an SBA loan, you still might not have all paperwork needed on hand—and will need to draft other pieces of the application, too, like letters and proposals. Plus, if your business has multiple owners, you’ll need to get them involved, too. That’s one of the things that can extend the SBA loan timeline, even before your application is submitted.

→TL;DR (Too Long; Didn’t Read): There’s a lot of paperwork involved in prepping an SBA loan application. And although the actual SBA loan timeline is about 60 to 90 days, if your application isn’t in order, it could take much longer.

Let’s Talk About the SBA 7(a) Express Loan, Too

Even when the SBA loan sounds ideal, the SBA loan timeline doesn’t always sound as good. There’s where the SBA 7(a) Express Loan comes in. You can sort of think of it as the little sibling to the the SBA 7(a) loan.

So, if the 7(a) is the loan that you’re really keen on and you don’t want to wait out the full SBA loan timeline, here’s what you’ll want to know about the SBA 7(a) Express Loan. You can use it just like an SBA 7(a) loan with the same flexibility, plus with that same 10-year term.

Here’s the big difference, though: the SBA 7(a) Express Loan is only backed by a 50% guarantee by the SBA (versus 85%)—which means you’ll need to provide fewer documents and less paperwork. And that could shave off two to three weeks from the SBA loan timeline.

SBA Express Loans max out at $350,000, and can take the form of either a term loan or a line of credit. They’re more expensive than standard SBA loans because the guarantee isn’t as high, so the lender will offer less ideal terms.

→TL;DR: The SBA 7(a) Express Loan is the little sibling version of the 7(a) loan—smaller amount and higher rate, but less paperwork and potentially faster SBA loan timeline.

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The SBA Loan Timeline vs. Other Business Loans

If waiting 60 to 90 days isn’t in the cards for you, take a look at how the SBA loan timeline compares to other types of small business financing. Although SBA loans generally offer the best terms out there, you might find there’s another option worth considering alongside the different types of SBA loans, depending on your specific needs and plans.

SBA 504/CDC Loan Timeline vs. Equipment Financing Timeline

If you’re looking to finance a fixed asset with an SBA 504/CDC loan, but you want to do it faster than the SBA loan timeline allows, l0ok into equipment financing. Working with a lender to get financing specifically for specific equipment allows you to work faster and with less paperwork—in some instances, all you need to get the process going is a quote for the equipment you want to finance.

A sample timeline could be:

  • As little as a day to get your application paperwork in order
  • 1 to 2 business days for loan approval
  • 5 to 10 business days to get your cash in hand

And equipment financing is easier to qualify for than an SBA loan, since the loan is self-secured (meaning that the equipment itself provides a lender collateral in case of default).

SBA 7(a) Loan Timeline vs. Alternative Lender Term Loan Timeline

If you’re looking to get your hands on a sizable lump sum, but would like to get it faster, look into a term loan through online lender. The traditional-style business loan that you think of when you think of a business loan is also available through alternative lenders (aka non-bank loans) on online lending platforms, which can often process your request with less paperwork and quicker, too.

A sample timeline might be:

  • As little as a day to get your application paperwork in order
  • 3 to 5 business days for loan approval
  • The possibility to have your loan in your bank account same day

Alternative lenders do still look for good credit scores (~600+) and time-in-business (about a year), but there’s a bit of flexibility here that could work toward your advantage.

SBA Loan Timeline vs. Business Line of Credit

More SBA loans are issued as term loans, but you might also be considering applying for an SBA line of credit, too. Or, even if you haven’t looked at a business line of credit, you might want to—especially if you want open options for the future of how you can use your business loan. Business lines of credit from online lenders are some of the fastest ways you can get business financing in hand, and also have some of the lowest barriers for qualification. (Some lenders don’t even look at your credit score.)

  • The fastest business lines of credit will get you approved and get you financing within 24 hours—or even instantenously

Plus ,on a business line of credit, these flexible “revolving” lines of credit work like business credit cards, in which credit will become available again once you pay off your balance.

→TL;DR: If you can’t wait out the SBA loan timeline, there are other options to consider that could get you money in a couple of weeks, or even instantaneously, depending on your business needs.

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Why Wait for an SBA Loan?

The Advantages of SBA Loans

There are lots of advantages of SBA loans. But key among the reasons you’d want to go through the process of applying for an SBA loan over other kinds of small business financing? Their generous terms and low interest rates for small business owners with a good credit history.

For example, the most creditworthy borrowers can qualify for as much as $5.5 million of financing and repay it over the course of 7 to 10 years. You’re not going to see many non-SBA loan terms that allow you that much financing and that long of a term to pay back your debt, regardless of your credit history.

Plus, as we mentioned before, another reason, why SBA loans are so great because of their interest rates. Your average SBA loan rate is anywhere from 6% to 7% over the course of 7, 10, or 25 years, whereas a non-SBA loan interest rate hovers around 7% to 10%.

Banks are able to offer low rates because these loans come with a guarantee from the US government in case of default. Since the SBA acts as a guarantor on these loans, banks can invest with more confidence and less risk. This lowered risk means that the bank will charge you a little less to borrow its money as, essentially, a sign of its confidence in your ability to repay.

And, of course, lower rates mean cheaper loans.

→TL;DR: SBA loans are favored for their large capital amounts, generous payback periods, and low interest rates.

When to Go for an SBA Loan vs. When to Take Another Loan

As great as SBA loans can be for plenty of small business owners, they may not always be the perfect solution for you or your business. In some cases, other types of small business loans (or even alternative financing sources) are a better fit, based on your needs or financial situation.

For example, if you’re in a rush to get your loan approved and have cash hit your checking account, an SBA loan timeline might be too long, since the paperwork could take too long to prepare. Or maybe you have a credit rating below 660, and your prospects of SBA loan approval are slim.

Here’s when you should play the waiting game versus moving on to other options:

Wait Out the SBA Loan Timeline When…

  • You need a substantial loan. SBA loans can go into the multi-millions, so sit tight if you need access to large sums of money.
  • Time’s on your side. If don’t truly need the money right away, you’re better off going through the SBA process and getting a lower interest rate.
  • You need a longer payback period. SBA loans offer some of the longest terms in the game, which means you get more time to pay back what you owe.

But if none of these apply to you, and you need cash-in-hand soon, consider the alternatives.

Apply for Another Type of Small Business Loan When…

  • You need money ASAP. As much as we all love filling out paperwork, perhaps you don’t have the bandwidth to tell your business’s life’s story one form at a time.
  • Your credit might be an issue. If you’re not looking at a great credit score, you should consider spending your efforts elsewhere.
  • If you need a loan for invoice financing or another specific purpose that doesn’t necessarily warrant all of the steps of going through the SBA process.

→TL;DR: An SBA loan might only be worthwhile for you under certain circumstances. And if any of them are a deal-breaker, you may be better off seeking another kind of loan.

The Most Important  Things to Know About the SBA Loan Timeline

The bottom line on the average SBA loan timeline is that you should expect to spend the same time waiting for the final verdict on your approval as you would for just about any other kind of bank term loan. But you’ll need to budget in more time to get your paperwork together before you submit for an SBA loan in the first place.

So, even if the SBA loan approval process takes your standard two or three months, you should build in plenty of prep time while you amass all of the documents you’ll need to put your best foot forward. Get your printer ready.

There are also alternatives if you don’t want to wait out the full SBA loan timeline, and the SBA 7(a) Express Loan, too.

But if you can apply for an SBA loan, do it. Even if the sheer volume of information you’re required to provide for the application sounds daunting, it’s worth it in the end. You’re putting your effort toward getting the best possible small business loan on the market. Consider the amount of work you’re putting in, and the time it takes to do it, well spent.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Meredith Turits

Managing Editor at Fundera
Meredith is Fundera’s Managing Editor, overseeing editorial. Drawing on her own background in small business and startups, she writes on business, finance, and entrepreneurship. Meredith has contributed to publications including the New Republic, Rolling Stone, Vanity Fair, The Paris Review Daily, and more.

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