How Long Does It Take to Get an SBA Loan?

The SBA loan approval process takes approximately two to three months from application to closing, and sometimes longer. The effort of preparing a business plan, gathering your documentation and applying for the loan can take weeks by itself, as can underwriting the loan once it’s in the lender’s hands.

Since the U.S. Small Business Administration guarantees up to 85% of an SBA loan — meaning it repays the lender if the small-business owner defaults on their payments — the application and underwriting process can be more time-consuming than for other types of business loans. The timeline also depends on the type of SBA loan and lender.

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The SBA loan approval process

While the SBA loan approval process usually takes 60-90 days, this is an estimate. It may take more or less time depending on the type of loan, the lender, how prepared the business owner is and whether the lender needs approval from the SBA before moving forward. What you can expect from a typical SBA loan application process is as follows.

SBA loan application

Time: up to 30 days, but varies by person.

Before you start your SBA loan application, you want to make sure that your business qualifies. Though exact SBA loan requirements are up to your lender, generally you need to be a U.S. business operating for profit, and qualify with the SBA’s size and industry standards.

If you’re applying for an SBA 7(a) loan, for example, you’ll be asked to fill out an application that asks for personal information and includes several questions about your citizenship status, any criminal history, your business and how you plan to use the loan. You must also provide a statement of personal history, a personal financial statement, business financial statements, business ownership and licensing documents, loan application history, income tax returns, a resume and a copy of the business lease.

SBA loan underwriting

Time: as little as 10-14 days, or as long as 60-90 days.

Underwriting is the process by which a lender determines if they will approve your loan application, how much they will approve and at what rate you’ll have to pay it back. During this stage, the lender will check your credit score and your business plan to determine how likely you are to repay the loan, plus interest.

If your lender isn’t in the SBA’s Preferred Lenders Program, the SBA must approve the loan before the lender underwrites it. This situation will likely result in a longer loan approval process.

At this point, the lender may also collect appraisals for any SBA loan collateral offered up in case of default, and analyze environmental reports, balance sheets, income statements and financial projections.

SBA loan approval

Time: 10-21 days.

If your loan is approved, your lender will start to draw up your loan documents. Most importantly, this task includes a formal commitment letter detailing the loan amount, terms and conditions, any collateral involved, repayment terms and interest rate.

SBA loan closing

Time: typically seven to 14 days, or as long as 90 days.

Closing is the final step in the SBA loan application process, and generally takes seven to 14 days, though some banks warn it could take up to 90 days. During this period, the lender should be in touch with you about any issues, and may request additional documents such as proof of insurance and statements to confirm your down payment.

»MORE: SBA loans vs. conventional bank loans

Factors that affect SBA loan processing time

Lender

Banks that are part of the SBA’s Preferred Lenders Program will usually process loan applications more quickly than a lender that’s not in the program. PLP lenders have the authority to determine an applicant’s eligibility themselves — rather than wait for the SBA to do so — which helps streamline the process and move it along more quickly.

Type of SBA loan

While the amount of time it takes the SBA itself to approve funding is only part of the total equation, the faster the SBA approves the funds, the sooner your lender can start underwriting your loan. The SBA reviews the applications for different types of their loans at different speeds. For example, because of the size of SBA microloans, they require less scrutiny and may be approved in as little as a month. SBA Express loans, which are a type of SBA 7(a) loan, can be approved by the lender without involving the SBA, making them one of the fastest types of SBA loans.

»MORE: What is an SBA Bolt loan?

SBA loan purpose

As with any loan, the amount of documents that need to be collected, submitted and processed, along with the level of scrutiny, can vary greatly depending on how you’re going to use the funds. A working capital microloan requires a lot less paperwork than a business acquisition loan or a commercial real estate loan, for example.

A business purchase will require all the financials from the existing business, licenses, a letter of intent or sales agreement and more. A commercial real estate loan requires a property appraisal and possible site visits.

Undisclosed financial issues

Red flags on your credit report, outstanding liens or judgements and even past bankruptcies are not necessarily deal breakers when applying for an SBA loan. However, it’s best to let your lender know about any financial issues upfront, so they don’t cause additional delays during the underwriting process. A lender may be able to help you take care of some of those issues before you move on in the process, or at the very least, adjust your expectations moving forward.