How long does it take to get a startup business loan?
The short answer is that it can take anywhere from a few days to a few months to get a small business loan. The long answer is that the timeline depends on a number of factors, including the type of loan you're applying for, the lender you're working with, and your own qualifications.
Getting a startup business loan can be more difficult than getting approved for financing as an established business. This is because most lenders gauge their risk of borrowing based on the financial stability and history of an applicant's business.
According to Lendio, a lender marketplace, typical startup loans fall between $9,000 to $20,000. But lenders may approve you for more — even up to six figures. For most small business loans, lenders set amounts based on factors like the company's time in business, revenue and credit history.
The application itself should only take a few minutes to complete, and you can expect to get a decision on your status within a couple of business days or more, depending on the lender. Some lenders send money even faster — for example, Lightstream might fund your loan as soon as the same business day.
For businesses that want an SBA loan but need cash fast, the federal government created the SBA Express loans. There are two types of these fast business loans, the SBA Express and the Export Express. For the SBA Express, the SBA will respond to your application in as little as 36 hours.
Which banks offer startup business loans? Some large, national banks like Bank of America, U.S. Bank and Wells Fargo offer certain loan options for companies with less than two years in business. In general, however, online and nonprofit lenders are more likely to offer startup business loans.
If you have good credit and can meet the lender's eligibility guidelines, getting a business loan with an LLC can often be easy. But new businesses and businesses with limited revenue may have difficulty getting approved, especially with traditional banks and credit unions.
It is possible to get a startup business loan with no revenue or no money. But if you need to find financing that doesn't depend on cash flow, your best choice may actually be to wait — if you can afford to. You'll likely qualify for better rates and terms once your business's finances are stronger.
Some of the easiest loans to get approved for include payday loans, no-credit-check loans, and pawnshop loans. Personal loans with essentially no approval requirements typically charge the highest interest rates and loan fees.
Banks generally require that you have good to excellent credit (score of 690 or higher), strong finances and at least two years in business to qualify for a loan. They'll likely require collateral and a personal guarantee as well.
What credit score is needed for a small business loan?
However, a credit score of 680 or higher is generally considered good and will make you eligible for most small business loans. A credit score of 720 or higher is considered excellent and will give you access to the best interest rates and terms.
Medium-Term Business Loans
A business owner can take up to $500,000 with a medium-term loan. Your credit, revenue, and other factors will determine your eligibility for this loan. The average loan amount is around $110,000.
Getting approved for a personal loan generally takes anywhere from one day to one week. As we mentioned above, how long it takes for a personal loan to go through depends on several factors, like your credit score. However, one of the primary factors that will affect your approval time is where you get your loan from.
Funding could take anywhere from seven to 90 days. In most cases, once the SBA approves a loan, a business will receive funds within seven to 14 days. Your lender can provide you with an accurate timeline for receiving funds.
Mortgage lenders verify employment by contacting employers directly and requesting income information and related documentation. Most lenders only require verbal confirmation, but some will seek email or fax verification.
- Know how you're going to use the loan. ...
- Strengthen your credit score. ...
- Prepare a solid business plan. ...
- Show your business' health. ...
- Invest in your business. ...
- Consider where you're applying for your loan.
If you're looking for a 20k to 50k business loan, you usually need an established business with a healthy cash flow to be able to qualify for many loan options. Often, even online lenders need you to demonstrate business success and have a solid business plan — to prove you have the eligibility to pay back the loan.
The U.S. Small Business Administration offers three main loan programs — the 7(a), 504 and microloan programs. Each of these small-business loans may be an option for startups, depending on your individual needs, lender and qualifications.
SBA Microloan: Best SBA loan for startups
If your new business is looking for small loan amounts, an SBA microloan might be just the solution.
Most banks require that a business has been in operation for at least one to two years, but some online lenders may only require six months. The longer the business has been around, the more stable it looks to potential lenders—and the lower interest rate you may receive.
How do I fund a new LLC?
- Determine how much funding you'll need.
- Fund your business yourself with self-funding.
- Get venture capital from investors.
- Use crowdfunding to fund your business.
- Get a small business loan.
- Use Lender Match to find lenders who offer SBA-guaranteed loans.
- SBA investment programs.
Small business loan amounts vary in size. While it's possible to borrow anywhere from $500 to over $5 million, how much you actually qualify for depends on the lender and your unique situation.
The credit score for your LLC is based on its credit history, payment history, and financial behavior, including how it manages its debts and financial obligations.
A no-doc business loan refers to a business loan that requires minimal documentation, such as only business bank statements, to apply. Business loans with minimal documentation tend to have higher interest rates and shorter repayment terms than bank or SBA loans.
If you plan to apply for a business loan with only an EIN, you'll likely need to provide additional documentation as part of the verification and underwriting process. This often includes business financials to demonstrate the business can pay back the loan on its own. Choose a lender and apply.
