How Long Does It Take to Get a Business Loan?

Business owners seek loans for many reasons: strategic acquisitions, operational expansions, equipment or asset purchases, cash flow shortfalls, and emergencies. Yet, in many cases, the business loan application process is fraught with inconsistencies and uncertainties. It can be hard to tell how long it will take to go from application to approval to accessing funds, which isn’t ideal. This is especially true in time-sensitive situations that demand efficient solutions.

In everyday practice, the amount of time it takes to access business loan funding varies and depends on many different factors, including:

Let’s take a closer look to determine how these various factors impact the typical business loan timeline.

Borrowing Through a Bank

There are definite advantages to borrowing through traditional banks. Banks have strong government-backed safeguards in place, reducing risk for their customers. You can deal with people face-to-face. If you’re a longtime client of a specific financial institution, you may also qualify for special rates and other advantages that can save you money on the overall cost of your loan.

However, traditional banks tend to maintain strict eligibility standards. They have a reputation for approving loan applications at relatively low rates, especially for borrowers seeking financing for a start-up or an operational company that has yet to strongly establish itself.

Despite those caveats, borrowing from a bank or credit union still holds considerable appeal from a convenience and strategic perspective. Actual timelines vary, but the typical process unfolds like this:

So, if you plan to go through a traditional bank, you should expect the entire process to take at least five to seven business days.

Obtaining an SBA Loan

The Small Business Administration (SBA) is an initiative of the U.S. federal government. It works like this:

For banks and financial institutions, this means the government will cover the stated percentage of an SBA loan if the borrower defaults on their repayment obligations. For example, if an SBA-approved lender authorizes an 80% government-backed loan of $100,000 and the borrower does not repay the money, the federal government will cover $80,000 or 80% of the lender’s loss.

The SBA program greatly reduces the risks lenders face, which theoretically makes it easier for qualified borrowers to get approved. However, SBA loans require extensive documentation and are notorious for taking a very long time to complete.

If you’re lucky, you might be able to navigate the SBA loan process in about 30 days. For most borrowers, timelines of 60 to 90 days are more typical. In some cases, approval can take as much as 180 days to complete. Rarely, SBA loans can even take longer than six months to access.

SBA loan programs are great for both banks and borrowers, but they can take time.

Borrowing Through an Online Lender

Online lenders have driven a great deal of business loan innovation. These companies belong to a wider industry known as the financial technology or “fintech” sector. Many of them make use of advanced digital assets like algorithms and artificial intelligence (AI) to evaluate incoming loan applications. These refined technologies enable them to generate very accurate insights into borrower characteristics, which in turn allows them to make loan decisions far more quickly than traditional banks.

These advantages come with some trade-offs. Business loans from online and alternative lenders generally carry higher fees and interest rates, especially if your credit score is outside the optimal range. However, online lenders approve a much higher proportion of applications, making their loans more accessible to a broader base of potential customers.

Online lenders are also useful if you’re in need of quick cash. In many cases, applications take only a few minutes to complete and double as a kind of loan pre-approval. A large number of online lenders can set you up with funding within 24 hours of submitting your application. Some are a little faster, offering same-day service. Others may take a little longer, but 48 to 72 hours is the norm even at the high end of the range.

Additional Factors Affecting Loan Processing and Funding Timelines

The aforementioned timelines apply to standard term loan or business line of credit applications. If you’re seeking a different type of financing, such as a commercial mortgage, merchant cash advance, or accounts receivable financing, you will probably need to submit additional supporting documentation. In many cases, this could add a day or more to the usual timeline.

Other factors that influence the amount of time a traditional, online, or alternative lender may take to process your application include:

In any case, prevailing wisdom suggests the following general rule of thumb: A bank or SBA loan could be a great option for those with time and excellent credit. On the other hand, online and alternative lenders could be a great solution for those who need money more urgently and/or have challenges related to their credit history.

What You Can Do to Expedite the Process

To make the business loan application process run as quickly and smoothly as possible, here are a few things you can do:

Happy hunting!