A loan from the Small Business Administration appeals to many business owners as a funding option. It often has more flexible interest rates and term lengths than other lending structures. You can qualify for it more easily and finance up to 80 to 90% of a project’s cost. One downside is that SBA financing typically has a lengthy approval process lasting about two to three months.

An SBA loan takes so long to approve compared to other financing types because the government backs the funding, and it comes with more regulations. You must also complete more paperwork since these loans typically deal with higher-risk clients, like those starting a new business.

How Fast is an SBA Loan Process?

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Which SBA Loans Can You Apply For?

The SBA offers several small business loans. Each has different approval requirements and applications. Here is each type explained:

  • SBA 7(a): This loan type is the most common program offered by the SBA. You can borrow up to $5 million, making this loan an ideal choice for many real estate needs.
  • SBA Express: This financing option is a type of 7(a) loan but with faster approval. You get a response to your application within 36 hours, though it will take longer to close. The maximum amount you can borrow is $500,000.
  • CDC/504: Using a 504 loan from a Certified Development Company (CDC), you access funds up to $5 million to buy assets that promote business growth.
  • SBA Microloans: This financing option gives you up to $50,000 to help with smaller costs like rebuilding, repairing or enhancing your business.

What Can You Use an SBA Loan For?

SBA funding helps cover various expenses related to your business. Each type has slightly different applications. For example, a microloan might work well for more minor expenses like buying supplies or furniture, while an SBA 7(a) covers higher costs like constructing a new building. General applications for SBA financing include:

  • Purchasing or expanding commercial real estate
  • Building commercial real estate
  • Accessing short- and long-term working capital
  • Financing a business acquisition
  • Refinancing other debts
  • Purchasing new equipment

While SBA loans work well for various business applications, small business owners may not take out money to cover personal expenses. The primary goal of the SBA program is to help businesses and create jobs, not pay off personal debts.

How to Get Approved for an SBA Loan

Generally, applying for any loan involves submitting documents to demonstrate your eligibility and awaiting a response from your lender. The process for SBA financing works much the same way and comprises four main steps.

1. Gather Documentation and Prepare the Application

Start your application by gathering the necessary documentation. To apply for small business funding, you will need the following documents:

  • Borrower information form
  • Personal financial statements
  • Business financial statements (including profit, loss and projected finances)
  • Business license or certificate
  • Ownership and affiliate information
  • Loan application history
  • Personal income tax returns
  • Business income tax returns
  • Personal resumes for each principal
  • Business overview and history
  • Business lease information

Your application process ends when you gather and submit all necessary documents. Depending on your preparedness, this step could take up to 30 days. Lenders will also ask about your citizenship status, past criminal history and your proposed loan use.

2. Lender Reviews and Underwrites the Loan

After submitting all essential documents, you must wait about 10 to 14 days or more for the lender to review them and decide whether to approve the loan and which terms to apply to your situation. During this step, lenders will check your credit score and business plan to determine whether you have the means to repay the money you borrow.

You will likely need a credit score in the mid to high 600s and a Small Business Scoring Service number between 140 and 160 to get approved. After reviewing all submitted documents, a lender will verify the details and determine whether they should offer you the financing.

3. Lender Approves the Loan and Sends a Commitment Letter

After reviewing your documents, a lender will approve your application and send a letter of commitment. This step typically takes about 10 to 21 days. The letter of commitment you receive demonstrates the loan type you will get, the amount you borrowed, the repayment period, the interest rate, and other terms and conditions.

4. Lender Closes on the Loan

After you review and sign all necessary documents, the lender will provide final verifications and disburse the money to your account. Final confirmations include double-checking that all documents are signed and reviewing title and environmental reports. Closing typically lasts about seven to 14 days. Then, you will have the funds in your account ready for use.

When Will You Know Your Loan Has Been Approved?

After you submit the documentation to apply for SBA funding, you will need to wait about two to three weeks. After this time, the SBA will email you all the relevant details. Check a pending application’s status by contacting the Small Business Administration or accessing their online loan portal.

Your lender might have an online portal you can access to get more details about your application as well. You can also contact your loan officer to discuss a recent application.


How Long Does an SBA Loan Take to Approve?

The period from when you first collect documents to the day you receive money in your account is typically about 30 to 90 days, though the SBA loan turnaround time may depend on the funding