How long does it take to get a small business loan? Key steps and timings
This is especially true if you’re seeking urgent short-term finance, but also if you’re eager to secure long-term investment for your next big growth initiative.
The key thing to understand is that the timings and process of applying for different types of finance vary considerably – anything from a day to several months – and you don’t want to find yourself waiting weeks to hear the result when you’re in a critical situation.
In this article, we explain the key steps involved, and how to avoid unnecessary delays.
The key steps in securing small business finance
Whichever type of business finance you’re applying for, the process follows a similar structure. Discover the key steps so you can prepare and maximise your chances of approval.
Understanding your funding needs
The first thing you must do is ensure you are clear on how much you need, what you intend to use the finance for and how you’ll repay it. Lenders look favourably on applicants with a defined purpose and plan for the money. The opposite scenario rings alarm bells as it suggests you might use the funding irresponsibly or struggle to pay it back.
Preparing business information and documents
Next, you need to gather the documents that are likely to be requested by lenders and that support your application. These documents show that your business is legitimate and capable of repaying any sums you borrow – and preparing them in advance can significantly speed up the process.
The requirements can be different depending on how established your business is or the type of finance you are seeking. For example, a new business may have to present a business plan that demonstrates a strategy for success and credible financial projections.
Common requirements include:
- Recent business bank statement
- Filed accounts (if available)
- Up-to-date management accounts
- Cash flow forecasts
- Details of existing borrowing
- Director identification and credit information
Application and initial assessment
Once you’ve submitted your application, the finance provider carries out an initial review that could include:
- Credit checks (business, personal or both)
- An assessment of affordability
- A review of your actual or projected turnover and profitability
- A risk evaluation based on sectors and trading history
The provider might get back in touch to request more information or clarification on statements or claims in your application. Be alert to any messages and respond quickly to avoid delays.
Approval, offer, and accessing funds
If the application is successful, you should receive a formal offer that outlines key terms, including the amount, cost of finance, repayment schedule, and any security requirements.
You might be eager to start using the cash, but make sure to review the agreement before you accept, as this is your last chance to check that the funding is suitable and that you’re capable of repaying it.
Once signed and any final checks are completed, the provider should release the funds – either as a lump sum or for drawdown, depending on the type of finance.
What can affect how long the process takes
Beyond the type of finance, the following factors have a big influence on how long the process takes:
- Quality and completeness of information – missing documents, inconsistent figures, or unclear explanations can slow down your application, while accurate and well-prepared information helps providers make quicker decisions.
- Business trading history and financial position – businesses with strong turnover, stable cash flow, and a solid credit profile are typically processed faster than newer or financially complex businesses that require more detailed assessment.
- Type of lender and finance product – online and alternative lenders often use automated systems that speed up decisions, whereas traditional banks or more complex products (such as secured finance) may involve additional checks and longer approval times.
