Loans are an important source of funds for small businesses. Whether you’re trying to get through a cash crunch or need money to grow your business more quickly, a loan can help.

Business loans from banks are known for having low interest rates and favorable terms. But they’re not known for getting you cash quickly. Most small business bank loans can take a week or more to approve your application and add funds to your account. Keep reading to learn more about business loans from banks and why it takes time to get approved and receive funds.

Loan process for banks and credit unions

When you apply for a loan from a bank or credit union, the loan goes through a process called underwriting.

During underwriting, the lender examines your application, your financial information and any other details it can find about you and your business. It then decides how likely you are to pay back (or default on) the loan. Based on the perceived risk, the bank decides whether to approve the loan and what interest rate to charge.

Once you apply, the lender will examine your application. You also usually need to provide some documents, including:

  • Business formation documents
  • Income statements
  • Bank statements
  • A business plan
  • Proof of collateral (if applicable)

The lender will also check your credit report. Depending on the information you provide and the contents of your credit report, the lender may make a decision or ask for more information.

For example, if your business is new or is on the cusp of qualifying for a loan, the lender might ask for collateral or for you to sign a personal guarantee. They may also ask for more financial history or other supporting documents.

Make sure all of the info you provide is accurate, and be as responsive as possible to help this process go quickly.

The five C’s

During underwriting, lenders look at the five C’s of your business. These are characteristics that indicate your company’s ability to pay its debts.

The five C’s are:


Are you willing to take on debt in the right situation and trustworthy enough to pay it back? Lenders mostly check this by looking at your credit history and making sure you have a good credit score.


Does your business have the financial capacity to handle new debts and make monthly payments? Each lender will calculate your capacity to make a loan payment differently but will typically look at your typical cash flow compared to the required payment.

The more money your business makes, the more capacity it has to pay off debts.


How much cash does your business have, and what is the value of your company’s assets? If you have a lot of capital that you could liquidate to pay the bills in an emergency, that can make lenders more willing to approve your application for a loan.


Lenders will look at the overall market and your specific industry to see if conditions are favorable or unfavorable for your company. For example, if your entire industry is going through a downturn or the economy is slowing down, that can hurt your chances.

A strong business plan showing how your company will succeed can help here.


Collateral refers to valuable assets that you can use to secure a loan. If you fail to make payments, your lender can take the collateral to compensate for its losses. Offering collateral makes it easier to qualify for a loan.

A personal guarantee — a promise to pay your business’s debts out of your money — can also serve as a type of collateral that makes qualifying easier.

Factors that influence loan processing time

How long it takes to get a loan varies. Let’s take a look at the factors that play a role.

The lender you choose

The lender you choose is possibly the most important in determining how long it takes to get a loan. Different lenders have different loan processing times.

Online lenders generally work faster than banks or credit unions, but processing times can vary even within the same type of lender.

The type of financing you want

Which type of loan you apply for also impacts the length of the underwriting process. SBA loans can take anywhere from 30 to 45 days to receive funds. On the other hand, short-term working capital loans can get funded within a week at the right bank or as soon as the next day with some online lenders.

In general, smaller loans have shorter processing times than larger ones. Also, adding complexity like collateral, which the lender needs to examine to assess its value, can lengthen the process.

Your borrower qualifications

Your creditworthiness will also impact the speed of the lending process.

If you have a long history of running your company successfully, a strong level of profit and cash flow, stellar credit and no other debts, it won’t take long for lenders to review and approve your application.

On the other hand, if your credit score is fine but not great, your business has a short history and your revenues fluctuate a lot, the lender may take more time and ask for more information when assessing your application, slowing down the process.

How quickly you get the documents together

When you apply for a loan, the lender will ask for basic documents, like financial statements and revenue reports. But the lender may ask for additional information as it goes through your application.

The lender won’t move the process forward until you provide that additional documentation, so the faster you can get the documents together, the faster your loan will get processed.

When you apply

Most lenders process loans on business days, which are Monday through Friday. Applying for a loan early in the week can help it get processed faster because the lender can start working on it immediately. Applying on a Friday, weekend or before a holiday will slow things down.

Bank loan process vs. alternative lenders

If you need cash quickly, you may prefer to work with an online or alternative lender for your loan rather than a bank or credit union.

While banks and credit unions tend to have better rates and fees, online and alternative lenders can often approve and fund loans the same day or the next day.

For example, if you want a loan from Bank of America, you often need to apply in person at a branch or over the phone. It can then take days for the bank to process the application and make a decision.

On the other hand, Bluevine is an online lender that offers lines of credit. The application is relatively quick and you can usually get a lending decision within minutes. You can access the funds in as little as 24 hours if approved.

Bottom line

Applying for a loan and getting it funded can take time. Knowing how long it will take can help you decide on the right time to apply to make sure you have the funds available when you need them.

To speed up the process, try to present yourself as a strong borrower and be responsive to requests for additional information. Even if you’re looking to get a quick loan, don’t forget to take the time to shop around and look for the best deal.

Frequently asked questions

  • Bank loans and credit union loans take longer to process than online loans. Expect it to take a few days to weeks to get a loan from a bank.
  • Banks typically have stricter requirements for businesses that want to borrow money. Online lenders may be easier to borrow from, but they charge high rates and fees for companies with imperfect credit.
  • Banks could deny a business loan for many reasons, such as the company not having a long enough operating history, poor credit, insufficient assets to serve as collateral or not having consistent cash flow to use to repay the loan.