Upon deciding that you require a loan for your business, ideally, you don’t want to be waiting a long time for it to be approved. There are several reasons why a business owner may be seeking a loan.
For example, it may be used to start a business or expand an existing company. Alternatively, the funds may be required for the day-to-day running of a business.
The application process can differ between lenders and institutions, which can, unfortunately, lead to inconsistencies in the timeline that you may expect it to follow.
Understanding how long it will take for your business loan to be approved will allow you to prepare ahead of time. It is also worth noting that the approval time can vary depending on the type of loan that you apply for.
The time frame for being approved for and receiving a business loan can vary from minutes to months. Though this is quite a difference in time, it ultimately depends on the lending institution that you turn to for your loan.
Essentially, it will be decided by the amount of documentation that you will need to submit for your application and the time that it will take the institution to read through the application before accepting or denying your request.
Unfortunately, if your request is denied, you will need to repeat the application process which will lengthen the amount of time that you should expect to wait to receive your loan. If your request is approved, you will then need to wait to receive your sum of money.
The Application Process
To gain an understanding of how long it is likely to take for your business loan to get approved, it is important to ensure that you are fully aware of each stage of the application process. Again, you will notice differences in this process between lenders but typically it is as follows:
First, you will need to submit your application for the loan with all of the necessary supporting documentation. Many lenders will ask for documents relating to your credit history and financial statements etc.
Depending on the lender, you may be asked for a more expansive list of documents. Once you have submitted your application you will then enter the second phase of the process which is known as underwriting.
This is basically when the lending institution reviews your request to assess what type of loan you will be eligible to apply for. If they are satisfied with your application and documentation it will then be approved and you will need to await the arrival of the funds in your bank account.
The payment method which you have chosen to receive it via will affect the time that it takes. If you have opted to have the funds deposited straight into your account it will take less time than receiving the money than by cheque.
The application process for an SBA loan is a little more complex. Besides completing the application you will also need to produce a business plan and several other documents including your anticipated cash flow, a credit check, business licenses, and background checks.
This in itself can consume a considerable amount of time because some may be able to compile their business plan and collect all of their necessary documentation sooner than others. The longer that it takes to submit, the longer you will be waiting to receive the loan.
Factors that will affect how long it will take to receive a loan
Many factors will influence how long it will take for you to receive your business loan.
From the lending institution that you choose to the type of finance that you need, and the complexity of the documentation that is required, each of these factors can increase the length of time that you will be waiting.
There are some lenders that have a faster turnaround time than others. Should you opt for a lender with such a reputation, you aren’t likely to have to wait as long to receive the funding.
You will often find that you will receive your loan quicker if you apply through an online lender rather than a bank. This is because, as implied, you can submit your application online without having to visit an actual branch.
Secondly, the time will differ depending on the type of loan that you require. For example, business lines of credit and invoice financing are typically approved sooner than more substantial loans that are intended for real estate or equipment, etc.
It also depends on the risk associated with your loan. Those that are offered on a smaller scale are seen to be less risky than larger loans, as such the process of approval won’t take as long so you will receive your funds sooner.
Aside from this, it also depends on whether you are applying for a secured or unsecured loan. Whilst the aforementioned requires the borrower to pledge assets that will be used as collateral, the latter does not.
As such, unsecured loans are typically approved within a shorter time frame so you will receive the loan payment sooner. In fact, you can expect the loan to be processed in a matter of minutes or hours. A secured loan, on the other hand, will take longer.
Due to the nature of this type of loan and the need for collateral, it can take many weeks for the payment to be deposited into your account.
As mentioned previously, some application processes will be more rigorous than others, asking for a more detailed amount of documentation. This will also then be reflected in the checks that the lender will complete.
They will need to check each of the documents that you have provided to verify that all of the details are correct before progressing your application to the next stage.
If your loan requires a hefty amount of paperwork, then, of course, you should expect this to lengthen the amount of time that you will wait for your loan to be approved and paid to you.
How can you speed up the application process?
There are steps that you can take to speed up the application process. Doing so will mean that you will receive your loan sooner.
You will benefit from choosing a lender that is renowned for its quick turnaround time. If you apply for your loan with an institution that is known to take a long time to process applications you should expect to be waiting longer.
When you decide to request a loan for your business, it is helpful to ensure that you have all of the necessary documents to hand.
This will mean that when the lender asks for them you will have them readily available so this will reduce the amount of time it takes you to get them together to complete this part of your application.
Another way that you can guarantee the approval of your application and speed up the timeframe in which you will receive your loan is by thoroughly checking the lending criteria.
This will ensure that your application is complete with all of the documents that are needed and there aren’t any mistakes that may prolong the process.
How long will it take to receive your business loan?
As you can see the amount of time that it will take to receive your business loan will vary between cases. For example, an SBA loan may be deposited into your account anywhere between 30 to 60 days.
Other loans, however, particularly those that are applied for online will be approved within a day and then paid to you shortly after. It is also worth noting that larger amounts and more substantial loans will take longer to process.
Planning and preparation are key when it comes to applying for a business loan of any kind. If you have all of the documents that you need available, it is likely that you will be able to submit and have your application processed within a short period of time.
Remember that there isn’t a definitive answer when discussing the length of time that it will take to get a business loan approved. It will depend on the nature of your claim, the amount that you are asking to borrow, and the lending institution that you go to for your loan.