Getting loan approval is quite a challenge for small businesses due to the rigid lending standards banks and conventional lending institutions have, for sanctioning loans. The banks consider investing in a small business to be risky. Therefore, small businesses mostly get loans at higher interest rates. From gathering the necessary documents to the final application process, applying for a loan and getting it approved is quite a task. But, the question is, what if someone needs capital on an urgent basis and doesnt have time to go through the lengthy time-consuming process? Small Business Association or SBA loans often act as a solution to such a problem. In the case of SBA loans, the initial application to the final disbursement of cash is completed within approximately 60-90 days. However, certain factors like the size, purpose of the loan and term length can alter the timeline of the entire process. With the purpose of helping small businesses flourish, SBA assures up to 85% of its loans and effectively decreases the lenders risk of financing small businesses. 

The three types of SBA loans are:

  • SBA 7(a) loans: 

This type of SBA loan can go up to $5.5 million with a repayment term length of 10 years, in most cases.

  • CDC/504 loans:

These are devised to help small businesses purchase real estate and equipment. The repayment term length is as long as 25 years. 

  • SBA microloans: 

With a shorter-term length of a maximum of 6 years, these are smaller loans that go up to $50,000. 

To get approval on the loan application, the borrower needs to provide the lender with detailed information about the company. The most qualified candidates and businesses with extensive, all-inclusive profit and loss statements, a considerably good personal credit score and a clear business plan get eligible to acquire an SBA loan. 

The small business loan application process:

  • All documentation and necessary information need to be brought together to apply for a loan. The application can take up to 30 days. 
  • The application is followed by the underwriting process that the lender initiates. The amount of time required varies with individual lenders. Therefore, a borrower, looking for quick cash disbursement, can approach a lender who promotes a turn-around time of not more than 10-14 days.
  • Post the underwriting process, the borrower receives a commitment letter from the lender, which can take an additional 10-21 days.
  • Finally, the loan gets closed by the lender in the next 7-14 days(approximately).

Similar to SBA 7(a) loans, SBA Express loans are often ideal for small businesses. But the application process of the SBA Express loans is faster. However, it offers a guarantee of only 50%, unlike the traditional SBA loans that give an assurance of 85%. With the option of getting issued in the form of a term loan or LOC, the maximum amount one can acquire through the SBA Express loans is $350,000.

Apart from SBA loans, there are other options as well for small businesses. One such option is Equipment financing, which can be a faster process with much less paperwork. The lender uses a piece of equipment as collateral in case the borrower defaults on the loan. It generally takes not more than a day to apply, a couple of days for the approval and 5-10 business days for the fund disbursement. Numerous small businesses opt for online lenders as the qualification required for online loans are considerably less rigid with the approval underwriting faster than banks. Also, few online lenders offer same-day business loans to borrowers looking for a quick lump sum in the form of standard term loans. Paycheck Protection Program (PPP) Loans were devised by the CARES Act of 2020 with the purpose of aiding businesses and helping them recover from the losses made during the pandemic. The deadline for applications was 31st May 2021. However, the businesses to whom the loans were approved before the mentioned date can be still funded. Besides, there is another kind of loan source; the Economic Injury Disaster Loan (EIDL). As EIDL is a low-interest loan that can be used to cover both physical and economic losses with eligibility requirements and guidelines similar to the PPP loans, it is ideal for those who have missed the PPP loan application deadlines.  

Approximate turnaround time for common SBA loans:

Loan TypeTurnaround Time
SBA Express Loan3 business days
SBA 7(a) Loan5-10 business days
PPP Loan10 business days
EIDL Loan21 business days
SBA Microloan30 days 
SBA 504 Loan30-900 days

Summary:

The timeframe of getting small business loans immensely depends on the kind of loan one is looking for multiple other factors. To apply for quick small business loans, you can visit ZEROPOINT Finance by clicking https://zeropointfinance.com/merchant-cash-advance/.