Loans from the U.S. Small Business Administration (SBA) are very popular for small businesses because of their competitively low interest rates and longer payback terms.
While most SBA loans will be approved within three months, the SBA loan approval timeline depends on what type of loan you apply for and what lender you apply with.
Find out more about SBA loan approval times and what to expect below.
There are many types of SBA loans available for different types of small businesses and different purposes. The type of loan you apply for will depend on what you need it for and your business’s qualifications, such as time in business, credit scores and business financials. Also, SBA loans are guaranteed through the SBA but are administered by SBA-approved lenders who manage applications, approvals and payouts.
SBA loans can take longer to process than other loans because the application process is extremely thorough and they’re very popular loan types. Most small businesses are willing to wait because of how much money they can get from the loan as well as the attractive repayment terms and low interest rates.
Below are some of the most common SBA loan types and what they can be used for, as well as their typical approval wait times.
As the most popular SBA loan type, SBA 7(a) loans can be used for a variety of purposes, including working capital, purchasing business equipment or even refinancing other debt. You can borrow up to $5 million with an SBA 7(a) loan, although most small businesses qualify for less money.
After applying for an SBA 7(a) loan, you can expect to wait 60-90 days for approval. This wait time depends on how thorough your application was, whether the lender has any follow-up questions or how many other loan applications the lender has to go through.
SBA 504/CDC loans are different from other SBA loans in a few ways. First, they can only be used for specific purposes such as to buy commercial real estate, pay for improvements on commercial property or to make major equipment purchases. Secondly, they’re funded through certified development companies (CDCs), so the borrower has to get approval from both the CDC and the SBA.
It can take 30-45 days for the SBA to approve a 504/CDC loan, although it can take longer for the CDC to approve the loan. In fact, some borrowers have had to wait up to six months to get their 504/CDC loans approved. For the most part, these loans are usually worth the wait: Borrowers can get up to $5.5 million for projects with an SBA 504/CDC loan, but they will have to prove that their project will create jobs or otherwise contribute to the local community.
SBA microloans are meant for smaller projects of $50,000 or less. They’re usually processed much faster than other SBA loans, and they tend to have fewer or less strict requirements. These loans are very popular among small businesses that are owned by minorities, women, veterans and low-income business owners.
It can take up to three months for an SBA microloan to be approved, although most borrowers will see approvals within a month.
SBA Disaster loans are issued by the SBA during emergencies and are meant for businesses who have experienced physical or economic damage due to a declared disaster. These are not loans you can apply for everyday, and they must be used for specific disaster-related purposes, such as repairing property or equipment or paying employees if your business had to be shut down.
Because they’re meant to be used during periods of disaster, these SBA are usually approved much more quickly than other SBA loans. SBA-approved lenders try their best to get loans approved within three weeks, as long as the application is complete and they don’t require any further documentation from the borrower.
The best way to get approved for an SBA loan is to make sure you are fully qualified for the loan. However, there are a few other ways you can help your chances.
First, make sure you submit all of the required documentation and that it’s correct. If the lender has to ask you for more information, this can slow down the process. Be ready to provide up-to-date financials, such as tax returns and bank statements, from the past three years.
Second, it’s a good idea to apply with an SBA Preferred Lender. These financial institutions tend to do a high volume of SBA loans and they can help you through the process. Also, they already have permission from the SBA to approve loans, whereas other lenders will have to send the loan application to the SBA for approval, which can take even more time.
If you have a previous relationship with the lender, this can help you even more. A financial institution that you know – and who knows you – will be able to guide you through the process and answer any questions you have, which can speed things up significantly.
The lender will be in touch with you to let you know if your SBA loan has been approved. This will include a formal commitment letter with your final terms and conditions, including:
Generally your financial institution will be in touch with you regularly regarding your loan, especially if they have follow-up questions or need further documentation.
Again, the entire process from application to approval to funding can vary depending on a number of factors, but you can expect a decision in the following time spans for each loan type:
| Loan type | Typical approval time |
|---|---|
| SBA 7(a) | 30-60 days |
| SBA 504/CDC | 30-45 days |
| SBA Microloan | 30-90 days |
| SBA Disaster Loan | 2-3 weeks |
Funding time for SBA loans can vary significantly, depending again on the loan type, the lender and how much the loan is for. The average funding times for the most common SBA loans are:
| Loan type | Typical funding time (after approval) |
|---|---|
| SBA 7(a) | 60-90 days |
| SBA 504/CDC | 30-90 days |
| SBA Microloan | Up to six months |
| SBA Disaster Loan | Up to five days |
Applying for a SBA loan is a different process from applying for other types of business funding. The SBA approval process and funding can take much longer than conventional business loans, online loans or other types of funding like business lines of credit or credit cards. This is because SBA loans require much more paperwork than other types of funding.
Also, SBA loans require approval from both the SBA and the lender you choose to borrow from. While choosing a Preferred Lender can cut this time down substantially, it still means you have to meet all the SBA’s requirements and have the documentation to prove it. Lenders may have their own requirements for you to meet as well, and it can take some time to figure out what those are.
SBA loans are very popular with small businesses because they offer such competitive repayment rates, loan amounts and repayment terms. But this doesn’t mean they’re the right business loan for you.
To find the best business loan for your small business, ask yourself these questions:
There are many other types of funding for small businesses beyond SBA loans, such as traditional business loans, online loans, crowdfunding, business lines of credit or business credit cards.
Take the guesswork out of funding your small business with Swoop. Simply download our app, answer a few questions and find answers on funding sources that meet your business needs, plus expert guidance on how to apply. Get started today.
Swoop was amazing! I was looking for refinancing and they were straight onto finding me the best possible option. I would highly recommend them.
Owner, F45 Cambridge
We work with world class partners to help us support businesses with finance
UK
IRE
AU
CA
US
ZA
NG
yet? Register here!