How Long Does It Take to Get a Business Loan?

Securing a business loan could be vital in helping your business grow. It could be the key to taking your company to the next level. There are multiple options available for financing, from equity to debt financing, which includes working capital business loans. But when applying for a business loan, you may wonder how long it will take to actually receive the funds.

And while this is a great question, there is not one answer. Rather, it often depends on many factors, including:

• Type of loan: The type of loan you seek may have a big impact on how long it will take. For instance, it may take 45 days or longer to hear about an SBA loan issued through the US Small Business Administration. Private lenders can often issue a working capital business loan much quicker. Still, generally speaking, you can expect to pay more fees or a higher interest rate for loans with a quicker turnaround. You must also ensure that you are qualified for the type of loan you seek. For example, some working capital loans may target certain types of businesses, such as minority-owned ones. Or they could restrict your use for the funding, such as business loans that cover new equipment only. You will likely hear back quickly if you aren’t eligible for this loan or if it doesn’t meet your needs. But not qualifying because you aren’t eligible for the funding means you have to start with a new application from the beginning.
• Application readiness: Your readiness to apply for a loan is one of the biggest factors in how long it will take to hear back. Fortunately, it is also an area where you have much control. Therefore, before applying, it’s a good idea to organize your financial documentation, including documents you know you will have to provide to secure funding, such as business documents, tax returns, bank statements, etc.
• The day you apply: The day you apply for a business loan can also impact how long it will take to secure funding. Submitting your application during the week rather than on the weekend can speed up the process and ensure you get a timely review.
• Your credit history: Another factor that impacts not only when you will hear back but also your loan terms is your financial history. You will often get approved quickly if you have a stellar credit record. However, having a poor credit record can take your reviewers longer to decide on lending. Unfortunately, it also often means you will be subject to higher interest rates and stricter repayment terms. Therefore, you must review the loan terms in-depth before accepting any funding.

Some business owners consider working capital loans or inventory financing an alternative to a traditional business loan, which can be completed in as little as 24 hours (but may take up to two weeks). This option is ideal for companies that need to secure funding fast. And since you generally have collateral with these funding options, you can still secure advantageous loan terms.

For more information about funding options, contact PenComCapital today.