Business Loan Timeline 101

Business Loan Timeline 101

Securing a business loan for a startup can be challenging, but it’s still possible. Novice business owners can improve their approval rate by selecting the correct type of financing, identifying competitive lending options, and having an excellent credit score.

Loan Application and Approval Process

The loan application process has three stages, namely applying, underwriting, and funding. You must complete an application and submit the required documentation, including bank statements, tax returns, and business plans. A lender may request additional documents, which may slow down the process of securing a business loan. Your loan application must go through the underwriting process, where the lender counterchecks everything to ensure you qualify for the funding. Some lenders offer manual underwriting, which takes several days, while others have automated the process. If the lender finds you have the required qualifications, you will receive funds in your bank account.

Funding Timeline by Loan Type

The type of business loan you’re seeking can significantly impact the duration of a loan. Due to minimal risk to the lender, invoice factoring and merchant cash advances are processed fast. You can secure equipment financing and commercial real estate loans by using the equipment you’re purchasing as collateral. Failure to honor the payments means that the lender can repossess the equipment. Such loans have an extensive underwriting process, as foreclosing an asset is a hassle for most lenders.

Funding Timelines Based on Lender

Some lenders process a business loan faster than others. Traditional lenders, including credit unions and banks, take longer than alternative lenders to process a business loan. The main reason is that you must visit the bank rather than simply apply on your computer. Plus, banks provide clients with large loans requiring extensive underwriting. Online lenders offer smaller loans that pose minimal risk for the lender, leading to faster and more intense underwriting.

Speeding Up the Process

If you want to secure a business loan fast, you should choose a lender with quick turnaround times and submit your business loan application on a weekday. You can’t control each step of your loan approval, but you can do multiple things to speed up the process. Other approaches include promptly answering emails and phone calls from the lender, having a business bank account ready, and choosing to get your funds through the wire instead of the check. You will still wait longer than you like but won’t be responsible for any delays.

It would help if you planned before applying for a business loan. Your funding timeline depends on the type of loan, lender, and other factors. Consult an expert from Atlas Capital Solutions to secure a business loan for your venture.