How Long Does the SBA 7(a) Loan Process Take?
How long the loan process takes, and how to make it as quick and easy as possible
Perhaps the most common question that prospective SBA 7(a) loan borrowers have is “How long will the loan process take?”. SBA loans have the reputation of having a long loan process. However, this is less of a problem than it used to be, and as long as the lender is experienced with SBA loans, the length of the 7(a) loan process isn’t much longer than that of a conventional loan.
How Long the SBA 7(a) Loan Process Takes
The SBA 7(a) loan process can be expected to take between 45-90 days for most loans. This can vary, however, and how long a particular loan takes depends on a few factors.
Factor 1: Size and Complexity of Loan
The first major factor in determining the speed of an SBA 7(a) loan is the size and complexity of the loan. Smaller loans and certain uses of proceeds, like working capital or business acquisition, take less time – closer to (or sometimes even under) 45 days. Some loans, such as a small working capital loan, can even be completed in under a month (and if you’re interested in a quick working capital loan like that, see here).
Alternatively, larger loans and other uses of proceeds, like real estate purchase or construction, tend to take longer. However, as long as the borrower provides all of the necessary documents in a timely manner, the loan process typically takes fewer than 90 days.
Factor 2: How Fast the Borrower Provides Documents
The other major factor in determining the speed of an SBA 7(a) loan, and perhaps the most important, is the borrower’s ability to quickly give the lender what they need. If the borrower promptly gathers and prepares the lender-requested documents and is an invested and constructive partner in the loan process, the loan process will be be as short as possible, barring any issues. However, if the borrower delays in submitting documents, answering questions, or anything else the lender needs – which is a very common issue – the loan process can take much longer.
How to Make the SBA 7(a) Loan Process as Quick as Possible
Unfortunately, there is no way to actually speed up the SBA 7(a) loan process. The lender must do their due diligence, and that takes time. However, there are some things you can do to make the loan process as quick as possible.
• Be Fast and Responsive to the Lender
The most common cause of over-long SBA 7(a) loan processes is the borrower taking a long time to respond to the lender’s questions, provide the necessary documents to the lender, and anything else the lender needs. This is understandable, as the borrower is usually busy with their business, family, etc., and it can be hard to find time to respond to an email, call the lender back, or gather and prepare all of the necessary documents – and there are a lot of documents! However, if you want your SBA 7(a) loan process to go quickly, it’s very important.
• Utilize Professional Help for Documents
Utilizing professional help for some of the documents, such as accountants and lawyers for financial and legal documents, is highly recommended. This will guarantee these documents are prepared quickly and correctly.
• Prepare Documents Ahead of Time
If you can, prepare as many documents as possible ahead of time, as it will save time during the loan process itself. For reference, check out our list of commonly requested SBA 7(a) loan documents.
SBA 7(a) Loan Process Speed – Step By Step
The SBA 7(a) loan process has 16 steps, from first finding a lender to the loan funds being disbursed. These steps range in length, with some taking a day or two and others taking weeks. Additionally, the steps often overlap, making the length of the loan process highly flexible.
Here’s a step-by-step guide to the speed of the SBA 7(a) loan process, going over each of the 16 steps and how long it typically takes. Note that these times are general estimates, and only relevant for most loans – they may not be accurate for smaller, quicker loans.
Step 1: Finding a Lender
This step takes… a few days
The length of this step depends on the method used to find a lender. If the borrower uses a loan broker or lender matching tool, this step could take as little as a day or two. However, if relying on personal research and contacting lenders directly, this step could take longer.
Step 2: Initial Consultation with Lender
This step takes… a day
The length of this step is however long it takes for the borrower and lender to get in touch with each other, usually a day or so.
Step 3: Initial Document Request
This step takes… a couple of days
This step involves the lender creating and sending a list of required documents, which takes a couple of days.
Step 4: Initial Document Gathering and Preparation
This step takes… between one and four weeks
This step involves a mixture of gathering and preparing documents, and usually takes between one and four weeks, depending on how quickly the borrower gathers and prepares the documents. This is an important step when it comes to loan speed, as it can either speed up or stall the loan process. If the borrower is sluggish in document gathering and preparation this step will be longer, and if they’re quick and proactive about it this step will be shorter. To make this step as quick as possible, it’s advised to prepare documents in advance, especially documents like financial statements and legal documents that must be outsourced to accountants and lawyers.
Step 5: Initial Document Submission
This step takes… a few minutes
This step involves submitting documents to the lender, so it only takes a few minutes.
Step 6: Preliminary Underwriting
This step takes… a few days
This step involves a broad, shallow analysis of the submitted documents, so it usually takes a few days.
Step 7: Pre-Qualification
This step takes… a couple of days
The length of this step is however long it takes for the pre-qualification discussion to happen, typically a couple of days.
Step 8: Full Underwriting
This step takes… between one and two weeks
As this step involves an in-depth analysis of the submitted documents, it can take between one and two weeks. However, the lender will ask questions and may request more documents as this step progresses, and if the borrower isn’t quick to respond then it can take longer.
Step 9: Loan Approval/Commitment Letter
This step takes… a few days
This step involves the lender drawing up the loan approval/commitment letter and sending it to the borrower, who then signs it. This process typically takes a few days.
Step 10: Deposits/Fees
This step takes… a couple of days
The lender sends the borrower a list of the deposits/fees they need the borrower to pay. Then, the borrower pays the deposits/fees. All of this usually takes a couple of days.
Step 11: Third-Party Reports
This step takes… a few days
Third-party reports, such as appraisals and environmental assessments, take a few days to order, then a few weeks to be completed. However, the closing process will continue as the reports are being worked on.
Step 12: Closing Document Request
This step takes… a couple of days
This step involves the lender creating and sending a list of required documents, which takes a couple of days.
Step 13: Closing Document Gathering and Preparation
This step takes… up to a month
The length of this step varies based on how quickly the borrower gathers and prepares the required documents. However, as this step often includes waiting for the issuing of licenses and insurance policies, there’s a lot of dead time/waiting that can bring this step to a month in length.
Step 14: Closing Document Submission
This step takes… a few minutes
This step involves submitting documents to the lender, so it only takes a few minutes.
Step 15: Review and Approval of Closing Documents
This step takes… around two weeks
The lender usually analyzes closing documents as they’re submitted. As such, this step involves the lender analyzing any remaining closing documents, doing a final review of the entire loan file, and drawing up the final loan closing documents. All of this takes around two weeks. However, if the business the loan is for is in a state that requires closing attorneys, this step can take a week or two longer.
Step 16: Loan Closing and Disbursement
This step takes… around a week
The length of this step is however long it takes for the closing meeting to happen, typically a few days, plus how long it takes the funds to be disbursed, typically another few days.
Example: Robert and the Gas Station
To help illustrate the length of the SBA 7(a) loan process, here’s an example. This is the story of Robert, who is getting an SBA 7(a) loan to purchase a gas station, including both the real estate and business:
Start Date: May 1
Step 1: Robert Finds a Lender
Robert is interested in getting an SBA 7(a) loan, so he uses 7aSavvy to find a lender. He fills out our Get Connected form and we match him with a lender that’s skilled, interested in doing his loan, and experienced with SBA 7(a) gas station loans within a day.
Time Taken: One day
Day Completed: May 2
Step 2: Robert’s Initial Meeting With the Lender
The lender calls Robert the day after they’re connected and they have their initial consultation, where they talk about the business and the loan.
Time Taken: One day
Day Completed: May 3
Step 3: The Lender Sends Robert Their Initial Document Request
The lender prepares and sends a list of required documents, which takes two days.
Time Taken: Two days
Day Completed: May 5
Step 4: Robert Gathers and Prepares the Requested Documents
Robert gets to work gathering and preparing the requested documents. Some of them, like his personal tax returns or the business’s financials, he already has or can get from the seller. Some of them, though, still need to be worked on, including a few that must be prepared by an accountant or lawyer. He gets the documents back from the accountant and lawyer in around a week, then it takes him another week to finish the rest of the documents.
Time Taken: Two weeks
Day Completed: May 19
Step 5: Robert Submits the Requested Documents
Robert has been submitting documents to the lender as soon as they’re ready, so he doesn’t have much left to send. He submits the final documents as soon as they’re ready, which takes a few minutes.
Time Taken: A few minutes
Day Completed: May 19
Step 6: Robert’s Loan Goes Through Preliminary Underwriting
The lender looks though the documents Robert has sent to evaluate him and the business. As this is a broad, shallow analysis, it only takes a few days.
Time Taken: Three days
Day Completed: May 22
Step 7: Robert and the Lender’s Prequalification Discussion
The lender contacts Robert to set up a date and time for the prequalification meeting, which they schedule for May 25. At the meeting, they discuss and negotiate the loan and its terms.
Time Taken: Three days
Day Completed: May 25
Step 8: Robert’s Loan Goes Through Full Underwriting
The lender thoroughly analyzes the documents Robert has submitted to get a full idea of him and the business. As this step progresses, the lender periodically contacts Robert, asking him questions and requesting a few additional documents. Robert is only prompt in responding to the lender in some instances, so this step takes eleven days.
Time Taken: Eleven days
Day Completed: June 5
Step 9: Robert and the Lender Sign the Loan Commitment Letter
The lender gets to work creating the loan commitment letter, which takes three days. After it’s done they send it to Robert, who signs it the next day, but waits to send it back until he has paid the required deposits and fees listed in the letter.
Time Taken: Four days
Day Completed: June 9
Step 10: Robert Pays Necessary Deposits/Fees
Robert looks through the required deposits and fees listed in the Commitment Letter, then pays them the next day, sending them along with the signed Commitment Letter.
Time Taken: One day
Day Completed: June 10
Step 11: The Lender Commissions Third-Party Reports
The lender decides which companies to use and commissions third party reports, which takes three days. They then proceed with the loan, so this step doesn’t take any more time, even though the third-party reports are still being worked on.
Time Taken: Three days
Day Completed: June 13
Step 12: The Lender Sends Robert Their Closing Document Request
The lender prepares and sends another list of required documents, which takes two days.
Time Taken: Two days
Day Completed: June 15
Step 13: Robert Gathers and Prepares the Requested Documents
Robert gets to work gathering and preparing the requested documents. Some of them he already has, but some of them he still needs to prepare or receive. Robert needs new, up-to-date financials from his accountant, as well as business licenses and insurance, which take various amounts of time to receive. After some periods of waiting for documents, everything is finally complete after a month.
Time Taken: One month
Day Completed: July 15
Step 14: Robert Submits the Requested Documents
Robert has been submitting documents to the lender as soon as they’re ready, so he doesn’t have much left to send. He submits the final documents as soon as they’re ready, which takes a few minutes.
Time Taken: A few minutes
Day Completed: July 15
Step 15: The Lender Reviews and Approves the Submitted Documents and Prepares for Loan Closing
The lender looks through the documents Robert has sent. Then, before closing they do a final review of the entire loan file. All of this takes about a week. They then finish preparing the final loan closing documents, which takes another three days, for a total of ten days.
Time Taken: Ten days
Day Completed: July 25
Step 16: Robert Signs the Final Loan Closing Documents and the Loan Funds Are Disbursed
Robert and the lender schedule the loan closing meeting for July 28. At the meeting, both parties sign the final loan closing documents. Then, after four more days the loan funds are disbursed, meaning this step takes a week in total.
Time Taken: One week
Day Completed: August 1
After three months, Robert has his loan! He uses it to purchase the gas station, the start of his small business ownership journey.
