How Long Does it Take to Get a Small Business Loan?
Updated: Jan 11
“It took them four months to tell me ‘no,’ and two days for you to tell me ‘yes.’”
Darren Carter is the owner of Carter's BBQ, a Cleveland-based dry-rub, low-and-slow barbecue business. When he was looking to grow his business and purchase a new smoker and trailer to take his 'cue on the road, Darren ran into some issues with trying to find a small business loan to do it!
Maybe you’ve been in Darren’s shoes before, waiting in limbo for months to get a loan from a bank to grow your small business. It can be frustrating, we hear you! So, why do small business loans take so long to process? How can we make it faster?
Why is the small business loan process so long?
The length of the process of getting a small business loan largely depends on the kind of loan you’re looking for. For example, real estate loans can take up more time than a working capital loan.
The typical number you might be looking at for a SBA loan is going to be two or three months. This number often changes depending on the amount of loans being processed, your preparation of loan documents, and the capacity of the lender.
Typically there are three stages in the process of getting a loan, and two of them are common roadblocks. The first step is the application - there, a lot of it is on you. You want to make sure that your financials are in order, you’ve got every piece of information organized - because if there is something missing, it could certainly delay your loan.
The second step is underwriting - it’s when the lender looks at your information and makes a decision on whether you’re fit to take on a loan, and what amount you’re qualified for and at what interest rate. This is where it can take forever on the side of the lender. Darren told us that for him, the underwriting process was where his business was stuck in loan limbo - it was taking forever, then the person on their case went on paternity leave, and ultimately it took four months - only for their loan to be rejected!
This kind of slow turnaround can be a major obstacle for small businesses that are looking for the money they need to grow their businesses. Luckily, there are options out there for getting a small business loan quicker, but not all options are the same!
Not all fast cash loans are the same
We’ve already written pretty extensively about how awful merchant cash advances can be for small businesses - especially for small businesses that were struggling during the pandemic.
Merchant cash advances, which make up a pretty extensive chunk of online lending, are great for getting quick cash, but that quick cash can be pretty expensive. You’ve probably seen them pop up on your Google search when you’re looking up business loans - they’re everywhere. Square Capital, Lendio, OnDeck, RapidFinance are all examples of Merchant Cash Advances.
These can be frustrating, because in some cases they’re a business’s last resort to get capital they need. But, APRs in the triple digits and no control over how you can repay your loan make them often more harmful than helpful.
Then, take Honeycomb loans, for example. Our underwriting process takes 2-3 days, and we won’t give you the runaround that you might see coming from a bank, like what Darren experienced.
Furthermore, we look at the full picture when appraising your loan situation - even if you’ve only been in business for a short time, even if you don’t have assets you’re willing to put up for collateral, you can still take out a loan on our platform. Furthermore, by crowdfunding your small business loan with Honeycomb, you’re not paying us or a bank back - you’re paying back your customers who invest in you!
“What was key was that Honeycomb saw us.”
So many business owners like Darren have experienced the run-around with banks, and have been shut down and told they’re not suitable for a loan. Others, like Pete Tolman of Iron Born Pizza have taken out debt from Merchant Cash Advances and credit cards, and had to deal with the reality of unfair capital offered to small business owners.
Honeycomb offers a new alternative to manageable, fair loans for small businesses that not only get them the money they need but also improve their relationships with their community and boost their marketing power.
Find out more about why businesses that fund with Honeycomb see a 60% year-over-year increase in revenue by filling out the form below!