Key takeaways
- SBA loans can take 30 to 90 days to approve and fund
- Some types of SBA loans have a faster approval process, such as SBA microloans or Express loans
- You may want to work with an SBA Preferred Lender as these lenders often have an efficient SBA loan approval process
An SBA loan is a business loan provided through the U.S. Small Business Administration. This federal organization exists to support small business owners in running successful businesses. SBA loans provide entrepreneurs with a low-cost business loan option guaranteed by the government. Generally, receiving funds following an application takes 30 to 90 days.
How long it takes to get an SBA loan depends on the lender you use and the type of loan you apply for. Popular types of SBA loans include 7(a) loans, 504 loans and microloans. While loan requirements and the approval timeline vary, there are a few steps in the approval process that you can expect with any SBA loan.
SBA loan process
When you apply for an SBA loan, the process and requirements differ by lender and loan type. However, there are some common steps to the process. Here is what you can expect:
1. Gather the necessary documents and information (timeline varies from person to person)
Before applying, you’ll need to make sure that you fit the SBA’s requirements for getting a business loan. SBA requirements include:
- Be a for-profit business
- Match the SBA small business size standards
- Be reasonably able to repay the loan
- Unable to get reasonable terms with a conventional business loan
Then, you’ll want to make sure you have the necessary documents and information that a lender will need. While documentation requirements vary, there are several things a majority of lenders require. Prepare to provide:
- Business plan
- Amount of funds and what you will use the funds for
- Your business credit score
- Financial projections
- Whether you can provide collateral
- Annual business revenue
- Industry experience and business age
2. Find a lender (timeline varies from person to person)
Different lenders offer different SBA loans. For example, nonprofit and community organizations often administer microloans, while banks handle 7(a) loans.
Research the loan type you need and lenders in your community. You can use the lender match tool on the SBA website to find lenders and compare their loan offerings.
3. Apply using the lender’s application process (up to 30 days)
Each lender will have its own application process. Use their website or visit in person to apply for an SBA loan through your chosen lender. A loan application could take a few hours or up to 30 days, depending on the lender and what they require. That said, if you’ve gathered all the necessary documents in advance, the application process will move faster.
4. Wait for approval (varies on the loan type, up to 90 days)
Approval times vary by loan type and lender. For example, the SBA will review an application for a Standard 7(a) loan within five to 10 days but could only take two to 10 days for a Small 7(a) loan. Once the SBA approves the application, it moves through the lender’s underwriting process. From there, your lender will draft a loan agreement. This can take 10 to 21 days.
Be sure to keep communication open with the lender to find out any additional information you may need to provide throughout the process. Any delay in providing additional information can increase the time it takes.
5. Receive your funds (7 to 90 days)
Once the loan is approved and the agreement is signed, you may have to wait to receive the funds. Each lender takes a different amount of time to disburse loan funds. Funding could take anywhere from seven to 90 days. In most cases, once the SBA approves a loan, a business will receive funds within seven to 14 days.
Your lender can provide you with an accurate timeline for receiving funds. Again, if your lender contacts you during this period with additional questions and there is a delay, it could slow the process.
Bankrate insight
As of January 30, 2024, the SBA has approved 19,599 SBA 7(a) loans in the 2024 fiscal year, totaling over $8 billion. The average loan size is $425,864.
How long does each loan type take?
The funding timeline for each type of SBA loan varies and can often be lengthy. While the SBA can review and approve applications quickly for Express loans, the time it takes for a business to receive the funds will vary depending on the lender. On average, most SBA loans take 30 to 90 days from applying to funding.
| Loan type | Description | Average funding timeline |
|---|---|---|
| SBA 7(a) loan | 7(a) loan subtypes are backed directly by the SBA. The SBA’s turnaround time is 2 to 10 business days, but approval from your chosen lender can take 30 to 60 days. | 60 to 90 days |
| SBA Microloan | Microloans are loans for smaller amounts of $50,000 or less. As you’ll be working directly with an SBA-approved microlender that is often nonprofit, approval timelines will vary. | 30 to 90 days |
| SBA 504/CDC loan | This type of loan is backed by the SBA and funded through certified development companies (CDCs), banks or credit unions. The SBA aims for a 15-day turnaround time, but it could take longer. Along with approval from your chosen lender, approval can take anywhere from 30 to 45 days. | Up to 6 months |
| SBA Express loan | Functionally the same as 7(a) loans, but the application process is expedited for quick funding. The SBA allows approved lenders to handle all Express loan applications without review, so approval timelines will vary depending on the lender you select. | 5 to 30 days |
Bankrate insight
The SBA’s Community Advantage loan pilot program ended on September 30, 2023. Lenders participating in the pilot program could apply for a license to become a Community Advantage Small Business Lending Company (CA SBLC). All pilot program lenders were approved for a license, allowing mission-based community lenders to continue serving underserved communities by offering 7(a) loans.
How to speed up SBA loan processing time
1. Work with an SBA Preferred Lender
Preferred Lenders are approved by the SBA to make final credit decisions without additional input. They also have a proven track record with SBA loans. Working with an experienced lender can eliminate the speed bumps you may encounter with other lenders.
2. Use updated financials
Providing at least three years of current financial statements and tax returns can make the process quicker. If you don’t provide this, your lender may need to ask you for additional documentation, which can slow the process.
3. Build a relationship with the lender
You will likely have questions and need help as you apply for an SBA loan. Find a contact at the lending institution and reach out regularly to ensure you do everything correctly throughout the process.
4. Consider an SBA Express Loan
If the timeline for a typical SBA loan is too long for your business needs, you might be able to apply for an SBA Express Loan. These loans are known for having a quicker approval timeline than a traditional 7(a) loan.
Bankrate insight
Different SBA lenders are known for approving high volumes of SBA loans. Look for the top SBA lenders in your state to help you get an experienced lender that can speed up the SBA approval process.
SBA loans vs. other small business loans
You may need another option for business loans, or your SBA loan may have been denied. Consider other loan options, including low-interest business loans from the best lenders.
- Business line of credit: A business line of credit is a flexible business loan. It functions similarly to a business credit card, providing borrowers with a specific credit line, which can be used up to the limit as needed. A business line of credit typically provides quicker access to funding than many traditional loan options.
- Online loans: Online lenders often specialize in funding less established businesses. Their approval requirements may be less stringent, with funds often available in a few days. Depending on the type of loan, you may see shorter repayment periods or a higher average interest rate than SBA loans.
- Equipment financing: Equipment financing is a loan provided to purchase a specific piece of business equipment such as computers, machinery, vehicles or office equipment. These loans usually come with a fixed interest rate and repayment terms of three to 10 years.
- Personal loans: Personal loans can be easier to qualify for than an SBA loan. In addition, personal loans are typically unsecured, which means you won’t be required to provide collateral to obtain the loan. The funds are provided in a lump sum and are repaid in monthly installments. As an unsecured loan, you may pay a higher interest rate than when using a business loan.
- Alternative loans: An alternative loan offers financing available outside of traditional banks or credit unions. Alternative lenders may also have lower fees than traditional lenders. Some examples of alternative loans include crowdfunding, peer-to-peer lending and angel investors.
- Business credit cards: Similar to personal credit cards, a business credit card is designed to cover everyday business needs and can help build business credit. It has a set limit that you can borrow up to, and you only pay interest on what you borrow that isn’t repaid by the grace period.
The timelines for funding and application requirements vary by loan type. Conventional loans through traditional lenders usually get funded faster than SBA loans. These types of loans are funded based on a bank’s underwriting criteria, so less paperwork is involved, and the process is quicker.
Online lenders, such as financial service companies, may offer more lenient requirements to qualify.
If you need working capital quickly, consider a fast business loan. These options provide financing in as little as five days, sometimes less. Typically, fast business loans are unsecured loans and have short repayment terms. Though they provide fast cash, as with any loan, they have pros and cons to consider.
The bottom line
SBA loans can be a great option if you have a new business and need financial assistance, but approval takes time. While timelines vary for different SBA loan types, you typically can get faster funding through conventional business loans. Research business loan types before deciding which to apply for.
Frequently asked questions
It can be easier to obtain approval for an SBA loan compared to a traditional lender. Many SBA loans have lower credit score minimums. However, these loans are offered through individual lenders, so requirements may vary.
Your lender will contact you once the loan is approved.
It can take 30 to 90 days to obtain approval for an SBA loan. However, some SBA loans, such as the SBA Express loan, have a faster approval timeline.
