Buying a business and need funding? Find out how long it takes to secure an SBA loan.
Guest Author Storm Miller | National Account Manager | Benetrends Financial
Navigating the process of securing SBA financing can seem very daunting for anyone undertaking the process alone. Working with an experienced SBA consultant that can help tailor your loan package to your specific project not only helps you raise your chances of securing a commitment letter, it can help reduce the amount of time it takes to reach your bank commitment and even help you secure better terms than you thought would be available. But how long should obtaining this commitment take? We have all heard the horror stories of loans taking eons but it doesn’t have to such a time-consuming and emotionally-exhausting process – just work with a funding specialist like those at Benetrends Financial. Below, we take a deeper dive into what a funding timeline should look like for obtaining your SBA commitment letter.
The SBA process should always start with a simple pre-qualification for financing. At Benetrends Financial, we use a simple two-page file that we have aptly named our SBA Financial Assessment to issue pre-qualifications for borrowers. The assessment typically takes about 15 minutes to complete and allows us to evaluate things like liquidity, access to retirement assets, monthly living expenses, net worth, credit score, etc. to give borrowers an idea as to their borrowing capacity. Once the assessment is completed and submitted, we issue a pre-qualification certificate within 24-48 hours. Our pre-qualification process is completely free-of-charge and because we do not require a hard pull of credit, never negatively impacts the credit score of our clients.
From the issuance of a pre-qualification certificate, the process of obtaining your commitment letter is dependent on the size of your loan:
SBA Express Loans up to $150,000:
Differing from the funding timeline of a standard SBA 7(a) loan, the SBA Express Loan option is a way to speed up the SBA Loan process for loans between $50,000 and $150,000. This program is designed for smaller start-ups and working capital loans for existing businesses and typically close within 30-45 days. The loans require only an abbreviated application consisting of fewer documents including:
· 1-page business plan
· 2 years of cash flow projections
· Full Credit Report
· 3 years of personal tax returns
· Some additional SBA-specific forms
These documents take our clients an average of 1-2 weeks to complete. Once completed, we will then submit the loan package to our Express lenders and we typically receive our term sheets over the next 7-10 business days with our best banks responding within 48 hours. Once a term sheet is signed and submitted to the bank, the commitment letter is typically obtained within 5-7 business days.
SBA 7(a) Loans up to $5,000,000:
The process of obtaining a larger SBA 7(a) loan typically takes between 45 and 90 days. There are various factors that impact this timeline. Some examples are the completion of the application, obtaining construction contracts and permits, and collateral requirements. As a general rule, the completion of an application takes an average of two to three weeks, which includes a more sophisticated business plan and additional SBA documentation. Once complete, the package is then submitted to our lenders who are given two weeks to review and create a proposal for funding the project. Our best lenders usually respond within 48 hours with their term sheets. Once the bank package is submitted to lenders, we will have the commitment letter in 10-14 days.
As you can see, the SBA Financing Process does not have to take an eternity. Working with the right professional can save you time, money and stress. For your free consultation, please do not hesitate to reach out to the financing specialists at Benetrends Financial!
Storm Miller | National Account Manager | 267-328-1709 | firstname.lastname@example.org
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