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November 25, 2022   /   K. Lee Graham

Walk through the SBA loan process at West Town Bank & Trust. Learn how to prepare for every stage of the loan pre-approval process.

Small Business Administration (SBA) loan programs are business-friendly loan programs made to help entrepreneurs grow their businesses with affordable financing. The loan programs’ unique benefits make them a great option for businesses that may struggle to find reasonable financing elsewhere. 

The detailed SBA loan application and pre-approval process makes it possible to offer these entrepreneur-friendly benefits. It’s a time-intensive process, but for those prepared to go through the application, the payoffs could be well worth the time that’s invested.

How Long is the SBA Loan Process?

The SBA loan process generally takes 60-90 days. However, your SBA loan application timeline depends on the size of the loan, what you’re using the loan for, and how prepared you are to go through the process.

For example, a working capital SBA loan of ~$350,000, the SBA loan process is estimated to take approx. 60 days. That’s assuming you have all your documentation in order and are quick to address any questions that come up during underwriting.

 Loans used to do things like purchase real estate, fund construction, or buy an existing business will take longer because of the additional documentation involved (a good rule of thumb, the more 3rd parties involved in the process, the longer it will take to get SBA authorization.)

You can make the SBA loan application process move as quickly as possible if you’re prepared with all of your documentation up front, and are prepared to work with your lender throughout the SBA loan application process.

Below, we walk through the 5 Phases of the SBA Loan Application and Pre-Approval Process at West Town Bank & Trust:

The SBA Loan Application Process:

1. Pre-Qualify for an SBA Loan

2. Get Pre-Approved through your SBA Lender

3. Collect Your Documents for SBA Underwriting

4. Package and Close Your SBA Loan

5. Access SBA Loan Funds

1.     Check Your Eligibility for SBA Loans

First, submit a brief questionnaire with a few high-level questions about your business. The pre-qualification questionnaire quickly determines if you meet the Small Business Administration’s baseline eligibility requirements for loan programs. These questions ask about your business history, how you intend to use financing, and where you’re located.

A lender will follow up with you before you submit a formal SBA loan application. They’ll talk with you one-on-one about your answers and your financing options based on your unique business goals.

This pre-qualification process helps streamline your application by quickly determining if the SBA loan application process is an efficient solution for your business. If it’s not, your lender will get you on the right path to financing that much faster.

Your Contact During this Stage: often you’ll work with a Business Development Officer at your bank or lender to check your eligibility.

2.     SBA Loan Application Pre-Approval  

The SBA pre-approval process is meant to examine your financial position and eligibility for an SBA loan based on your credit score, global cash flow, business history, and financial outlook. It takes the pre-qualification information even further to determine the specifics of your loan package. This includes a proposed loan amount available through the program based on your financial stats.

You’ll need these documents to get pre-approved for an SBA loan:

  • 3 Years of Business and Personal Tax Returns
  • Business Interim Financials (within 120 days)
  • Organizational Documents (ex. Operating Agreements, Bylaws, etc)

SBA Pre-Approval requires more documentation at this stage because the lender wants to ensure you’re set up for success before sending you to underwrite. The more you supply at pre-approval, the easier underwriting will be. It keeps your loan moving efficiently at every stage of the SBA loan application process.

Your Contact During this Stage: you’ll most likely be working with your Business Development Officer and your Bank’s internal team for SBA loan pre-approval.

3.     SBA Loan Underwriting Process

The SBA loan underwriting process is one of the most time-intensive stages of the loan application. This is the stage where you work hand in hand with the underwriting team to prepare your application for the bank’s credit review process.

First, your underwriting team will send you a list of any outstanding documents they’ll need based on your specific loan criteria. You’ll collect any remaining financial statements for your guarantors of the loan, leases and agreements, collateral valuations, and additional SBA paperwork that you will need for underwriting.

Next, the bank’s credit team will review your history in the form of a credit memo. this is the stage where the bank will perform a hard credit pull and ask you a few more specific questions about your business’s financial performance.

The underwriting process could take up to two months if you have lots of fixed assets, multiple businesses involved in the transaction, or a more complex loan package. However, if you are prepared with your documentation, the SBA underwriting process could take less than 30 days.

Your Contact During this Stage: you’ll work with a dedicated Underwriting team comprised of bank employees and (possibly) a lender service provider. Your Business Development Officer is also always ready to answer questions about your loan application.

4.     SBA Loan Packaging and Closing

Once you’ve made it through Underwriting, it’s time for your SBA loan to be packaged for closing. You’ll often work with your bank’s lender service provider to gather and verify the final details before your SBA loan is funded.

A lender service provider is a company that specializes in processing complex loans like the SBA loan. They work on the bank’s behalf to help move your SBA loan application through the process.

Our lender service provider will send you a checklist for additional documents needed for SBA authorization.

The SBA Packaging & Closing Document Checklist includes:

  • Business valuations
  • Appraisals on properties
  • Life insurance documents
  • Escrow documents
  • SBA form 1919
  • Title work

The Packaging & Closing stages is also when the lender service provider engages 3rd party partners like your attorneys and closing council.

Ideally, the SBA loan packaging process takes approximately 60 days. This stage is very detail-oriented, so your loan is airtight for closing. To keep the process moving efficiently, prepare to be on call to promptly answer any questions that the lender service provider has about your closing documents.

After Closing, you’ll review and sign Co-sign package before moving on to the funding stage.

Your Contact During this Stage: you’ll work with a dedicated Underwriting team comprised of bank employees and (possibly) a lender service provider. Your Business Development Officer is also always ready to answer questions.

5. SBA Loan Funding and What Comes Next

If you’ve made it this far, your loan is ready to fund! How you receive the loan amount will depend on your loan proceeds.

Working capital loans will deposit directly into your accounts. If you are using the SBA loan to buy a business or pay off debt, the SBA requires that the funds are sent directly to the 3rd party who will be receiving them.

Your Contact During this Stage: After your SBA loan is funded, you’ll be introduced to a payment servicer. This is your main contact for the duration of your loan repayment period. They’ll answer any questions about making payments, and will check in with you yearly to keep your records and file up to date throughout the life of the loan.

At West Town Bank & Trust, our goal is to make the SBA loan application process as transparent as possible. We believe in empowering our business owners with the information and tools they need to achieve their goals. Because when small business succeeds, we all do.

If you’re ready to get the SBA loan application process started, use the form below to check your eligibility.

Check My Eligibility for SBA Loans:

Step 1 of 8

How will you use the funds?(Required)

About West Town Bank & Trust: A financing partner should reciprocate the level of trust you’ve built around your practice. With a 100-year+ community banking history, West Town Bank & Trust works with entrepreneurs across the US to grow their businesses with proven financial solutions.

Whether you’re interested in purchasing another book of business, facilitating growth without restricting cash flow, or getting a better interest rate on your existing loan, our team of industry experts is here to help you seize the opportunity.